Universal Electronics Inc.

Good day, and thank you for standing by. Welcome to the Universal Electronics Fourth Quarter 2023 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 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 speaker today, Kirsten Chapman, LHA Investor Relations, a division of Alliance Advisors. Please go ahead.

Thank you, Amy, and thank you all for joining us for the Universal Electronics 2023 Fourth Quarter and Year-End 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 of this call, including any additional updated material, non-public information that might be discussed during this call, will be available at the company's website at uei.com for at least 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 may differ materially from those projected. These statements include the company's ability to timely develop and deliver new technologies and technology updates and related products introduced at this year's Consumer Electronics Show, including new products and technologies in climate control, smart home, and security spaces. Continuing to achieve new product development and design near and longer term successes as anticipated by management in the connected home space and particularly in the climate control markets. 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 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 and cost-saving initiatives, operational efficiency, liquidity requirements, factory optimization strategy, R&D spend, product line and business management, and other investment spending expectations, including our ability to execute on our stock repurchase programs. The company's continued ability to enforce its patented technology against Roku. the decline of the traditional subscription broadcasting business dissipating as management anticipated, the continued fluctuation of the company's market capitalization, and the direct and indirect impact that the company may experience with respect to its business and financial results stemming from the continued economic uncertainty affecting consumers' confidence in spending, natural disasters, public health crises, government 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 after 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 financial remarks, adjusted non-GAAP metrics will be referenced. Management provides adjusted non-GAAP metrics because it uses them for budgeting, 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 help investors evaluate UAI'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 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. It is now my pleasure to introduce Paul Arling. Please go ahead, Paul.

Thank you for joining us today. Our vision to connect the home and our mission to create smarter living are coming to fruition. We are building for a better future and made significant progress transforming UEI during 2023. We continued our product expansion into the growing climate control and home automation markets. We executed footprint optimization, efficiency, and corporate restructuring initiatives. And recent public events such as the affirmation of our patents and our powerful CES 2024 showcase, combined with ongoing customer wins, have fortified our foundation to drive growth. Based on our improved foundation, our continued streamlining, and our outlook in customer and product shipment projections, we expect to be profitable for the full year of 2024. Confident in our strategy and long-term growth, We initiated a stock repurchase program in the fourth quarter, which we plan to continue in 2024. Ryan will review in greater detail our financial results, our progress in our footprint optimization and efficiency initiatives, and our 2024 outlook. Now I'd like to discuss our patents, our products, and our customers. At UEI, we pride ourselves in providing the most innovative, highest level of quality products. Over the past 30 years, we have amassed over 500 issued patents with over 200 more pending, which creates significant differentiation in the features and capabilities we offer our customers compared to our competitors, as evidenced by our strong and sustained gross margin delivery over the many years. We provide customers with advanced wireless control through finished goods, embedded technology and licenses for software and services. It is important to note that most of the leading home entertainment companies in the world have chosen to partner with us on these advanced solutions. When non-customers use our technology, we act. Our first path to compensation is licensing. If an agreement is not achieved, we vigorously protect our intellectual property. As we have communicated before, we have been in litigation regarding patent issues with Roku for quite a few years. Last month, the U.S. Court of Appeals for the Federal Circuit affirmed a prior ruling by the U.S. International Trade Commission confirming Roku's infringement of one of our Quick Set patents. This decision will support strongly our return to the U.S. District Court to request the case be reviewed for monetary damages regarding the infringing activities of Roku and its TV partners. We are confident in our position and look forward to moving ahead with the case to its positive conclusion. Also in January, we had a productive week at CES, which provides a once in a year industry opportunity to connect with customers, expand our business partnerships, and capture new opportunities. We demonstrated our latest products and technologies across all our business lines to a worldwide audience of customers, prospects, and business partners. I'll review some of our CES product highlights. This year, CES had the largest in-person presence since 2020, pre-COVID. At this show, we hosted over 340 visitors to our booth representing over 200 different companies. A third of those meetings were with new potential customers that we do not currently do business with. A testament to the strength of our overall product and technology offering. Continuing our expansion into the climate control space, we expanded our UEI tied portfolio of smart thermostats with the addition of four new products to our product roadmap, as well as two new HVAC system accessories designed to simplify and extend climate control installation and functionality. Our lineup now includes a wireless bridge that allows for portability of the thermostat controllers anywhere in the home, a bridge with a built-in Zigbee and Matter capabilities for whole-home control, indoor air quality sensor integration with built-in control of in-room air purifiers, compatibility with the UEI-supplied smart thermostatic radiator valve accessory for European households, and a C-wire adapter for easy installation of low voltage thermostats in older homes. Our customers are quite interested in these solutions as they improve the performance of existing systems in new ways, as well as create new systems that are more integral to the smart home. We also unveiled the full capabilities of our Kwikset widget and Nevo software running on a wireless UEI-type platform. This product delivers a complete climate control and smart home control dashboard. It also enables unique control experiences between different brands and device categories without the need for an additional hub, all from the same tied thermostat control interface. We showcased our family of UEI Butler smart control hubs powered by UEI's QuickSet complemented by UEI ZigBee sensors and accessories that deliver a tailored experience for increased interoperability with diverse brands and ecosystems for the smart home. As reviewed on recent calls, we have been growing the number of customers as well as increasing our level of engagement with them, especially in home automation, climate control, and security. During Q4, in our hash channel, which is home automation, security, and hospitality, We were awarded a new project for a smart door lock and added three new channel partners for our tide climate control products in the multi-dwelling unit, energy and utilities, and custom integration space. We were also awarded two new product design wins for an existing motorized shade customer and secured a new product win with a major DIY home security customer. We expect some of these products to begin shipping in late 2024 and into 2025. In the HVAC OEM channel, we are actively working on three new products for Daikin, our largest HVAC OEM customer. Two are targeted at the European market and the other is bringing connectivity to their existing footprint of HVAC systems worldwide. In addition, we have product and technology design proposals active at five other major HVAC OEM brands, leveraging the design features and architecture currently deployed in our TIDE climate control products. In home entertainment, we are seeing a slight uptick in new product engagements with major customers in North America, EMEA, and India. While the volumes on these new product opportunities are not huge, The shorter development cycles relative to new smart thermostat developments offer potential near-term revenue in the back half of 2024. Based on the growing backlog of active new product developments, we continue to be optimistic about our long-term revenue potential as these new products are introduced and begin to ramp. Now to the financials. Brian, please go ahead. Thank you, Paul.