Universal Electronics Inc.

Good day and thank you for standing by. Welcome to the Universal Electronics third quarter 2023 financial results conference call. At this time, all participants are in listen only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Kirsten Chapman with LHA Investor Relations. Please go ahead.

Thank you, Sean, and thank you all for joining us for the Universal Electronics third quarter 2023 financial results conference call. By now, you should have received a copy of the press release. If you've 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 of this call, including any additional updated material, non-public information that might be discussed during this call, will be available on the company's website at uei.com for one year. During this call, management may make forward-looking statements regarding future events and 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 upgrades and related products introduced this year, including meeting the demand for connectivity and onboardability across devices, platforms, and the hybrid systems in the home. achieving new product development and design near and longer-term successes as anticipated by management in the connected home space and particularly the climate control market, and its line of ultra-low power and energy harvesting control products designed to address the growing demand for more sustainable solutions in electronic devices. The continued successful collaboration with existing and new customers in developing and launching next-generation products software solutions and technologies into existing and new markets, which result in increased sales and share growth in the new markets for the company. Management's ability to continue to manage its business inventories and cash flows to achieve its net sales margins and earnings through financial discipline, operating efficiency, liquidity requirements and manufacturing footprint utilization, R&D spend, product line and business management and other investment spending expectations, including our ability to execute our stock repurchase programs. The continued fluctuation of the company's market capitalization. The impact of the company's financial results that it may experience due to the supply chain constraints and inflationary pressures and microeconomic conditions in its consumers are experiencing and direct and indirect impact of the company may experience with respect to its business and financial results stemming from the continued economic uncertainty facing consumers' confidence in spending, natural disasters, public health crises, governmental actions or political unrest, including war, terrorist activities or other hostilities. The company undertakes no obligation to revise or update these statements to reflect events or circumstances that may arise from today's date and refers you to the press release mentioned at the onset of this call and the documents the company has filed with the SEC, including its 2022 Annual Report on Form 10-K and the periodic reports filed or furnished since then. In management's remarks, adjusted non-GAAP metrics will be referenced. Management provides adjusted non-GAAP metrics because it uses them for budgetary 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 and financial results and business trends of competitors and other companies. A full description and reconciliation of these adjusted non-GAAP measures versus GAAP are included in the company's press release issue 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. It is now my pleasure to introduce Paul Arling. Please go ahead, sir.

Thank you for joining us today. UEI's technology and products continue to help everyday people easily discover and interact with the devices and services in their home. We are the clear leader in this area, as is evidenced by a growing list of customers in home automation, climate control, security, and even home entertainment. During the third quarter, our efforts to control costs and optimize our manufacturing footprint, which Brian will elaborate on in a minute, began to yield benefits. For the third quarter of 2023, we increased gross margins to a high for this year, and combined with lower expenses, we delivered bottom line results in line with expectations. Over the last three plus decades, the home entertainment market has changed greatly, even more so over the last couple of years. Our prime home entertainment market customers, the video service providers, have experienced dramatic net subscriber losses, which were exacerbated by the impact we endured since the pandemic began. Even with this market decline, it is important to note that our technology leadership continued to grow. We maintain market share and we continue to win new projects in this channel. However, our absolute dollar amount of sales, particularly in subscription broadcasting, has decreased substantially. Nevertheless, we remain committed to this market and continue to support our customers with next generation solutions including many hybrid systems that combine linear and streamed content and our new line of low-power sustainable energy harvesting products. In 2023, we selectively invested in new home entertainment product developments on a handful of differentiating and innovative applications with our customers. A few examples of these include new control products for emerging streaming services, such as Sky Glass, as well as Liberty Global's Babylon Green ultra-low power remote. These products began shipping recently and will continue to scale in 2024. Most importantly, our strategy to extend our technologies and wireless expertise in adjacent markets is progressing well, and we expect our revenues from the connected home markets to grow substantially in the coming years. As we have stated over the past few years, we have been repositioning our business to focus on high growth markets in the connected home space. The climate control market, which we include in the overall connected home channel, represents a significant growth opportunity for us. I will provide a deeper dive into this market to better highlight the growth opportunities ahead. The worldwide thermostat control market today for residential and commercial installations is estimated at $1.8 billion, excluding China and India. Industry experts forecast this market to grow at a compounded annual growth rate of more than 10% over the next five years. UEI has been active in the climate control market for over 10 years, building LCD remote controls and wall-mounted digital controllers for Daikin, Fujitsu, Panasonic, and Toshiba, primarily targeting Asia Pacific and EMEA consumer markets. where HVAC OEM brand controllers have the dominant share of the thermostat market. In the US, the market for smart thermostats today is mostly served by third party and aftermarket brands. While these aftermarket products offer convenience and connectivity, they only offer basic control of HVAC OEM equipment and limited control of more advanced and energy efficient features in existing and new equipment. such as heat pumps, variable refrigerant flow, and dual fuel systems. As a result, many of the existing consumer branded smart thermostats miss the optimal control experience and lack the features to operate the HVAC equipment in the most energy efficient manner. With increased consumer focus on energy consumption optimization and greater emphasis on smart grid utilization, HVAC OEMs are now strategically prioritizing connectivity and interoperability in their controllers to deliver a better climate control experience for their customers. Leveraging our long history in user-centered product design, expertise in wireless device connectivity, and universal interoperability, we have been developing and commercializing a new line of advanced smart and connected thermostats and related sensors. The new portfolio, which targets North American and European customers, includes a comprehensive line of tactile and touch interface controllers with a smart home hub built in, supporting standard four-wire and proprietary control protocols for all the major HVAC brands. Additionally, the lineup includes a bridge product that can be wired to an existing HVAC system and wirelessly communicates to any of our tactile and touch thermostats mounted on tabletop stands that can be located anywhere in the home. A truly modular solution that can be mounted on the wall or conveniently placed anywhere in the home. The functionality of our climate control products is further enhanced with the built-in smart home hub that connects to our lineup of Zigbee sensors that include temperature, humidity, flood and freeze, occupancy sensing, door and window sensors, and CO2 monitoring. These products working together through software create a truly smart home experience. Systems that sense presence can bring both greater comfort and more efficiency, creating a much smarter home environment. For example, our devices are sensing temps anywhere in the home, determining who is in the home, and verifying whether doors and windows are open. We enable a range of control experiences, including smart lighting, smart shade and blind control from the same smart thermostat screens, as well as blending smart home and entertainment experiences like whole home audio. Bottom line, we are meeting the user where they are in the home and offering solutions they care about. The software designed into our new product line is powered by Kwikset Cloud for secure connectivity and our Nevo Virtual Agent to simplify device onboarding. and provide ongoing troubleshooting and support throughout the lifetime of the product, including sensor setup and configuration. Our user-centric approach and focus on delivering a truly connected experience for our HVAC customers brings new opportunities beyond energy management, including HVAC and control system telematics, to improve system design, user experience, and predictive maintenance. Our climate control lineup has received rave reviews from our customers as evidenced by numerous customer design awards ranging from HVAC OEM brands such as Mitsubishi Train US called Menace, which was announced earlier this week, Toshiba Carrier, and LG, as well as smart home, utility, and energy companies. Through our investments and innovation in this market and product category, we believe that there is a window of opportunity for us in the next few years to double our revenues in climate control by focusing on penetrating and growing our footprint in North America. These products take time to define, design, develop, and test, and we expect to see sales results to slowly improve in 2024 and grow substantially in the years thereafter. Now I'll turn the call over to our CFO, Brian Hackworth, for a review of the financials. Please go ahead, Brian.