Universal Electronics Inc.

Good day, and thank you for standing by. Welcome to the Universal Electronics First Quarter 2024 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 11 on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to our first speaker for today, Kirsten Chapman with LHA Investor Relations, a division of Alliance Advisors. Please go ahead.

Thank you, Crystal, and thank you all for joining us for the Universal Electronics 2024 First Quarter 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 the 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 www.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 penetrate the connected home space, and particularly the climate control and home automation markets, through the development and delivery of unique and innovative solutions as anticipated by management. The acceptance of UEI-tied family products in the global HVAC markets. 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 savings 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 our stock repurchase programs. The company's successful licensing of the company's QuickSet technologies. the company's ability to maintain its leading market share in the traditional subscription broadcasting business, and the direct and indirect impact the company may experience with respect to its business and financial results stemming from the continued economic uncertainty affecting consumers' confidence and spending, natural disaster, 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 after today's date and refers you to the press release mentioned at the onset of this call and documents the company files with the SEC, including its 2023 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 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 help 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 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 the closing remarks. It is now my pleasure to introduce Paul Ireland. Please go ahead, sir.

Thank you for joining us today. We are building for a better future, shifting sales and product development resources to the connected home space, expanding our end market reach, and implementing cost initiatives. These actions deliver Q1 2024 results as expected with strong year-over-year gross margin improvements. More importantly, our customer wins, our global footprint optimization, and our expense reductions position us for a profitable year, as well as position us for consistent sales and earnings growth into 2025, 2026, and beyond. The strengths we have built over the past decades delivering true, seamless interoperability, discovering, connecting, and controlling all devices and all brands, translate beautifully into the climate control and home automation channels. Our expertise in connectivity protocols from infrared to radio frequency to IP and our ability to make those devices work better together gives us a competitive advantage that continues to create unique and differentiated solutions. Our capability to design, engineer, and build solutions for the leading brands in the world that are interoperable and self-configuring can help the next generation of products in the home automation and climate control markets become ever more integral to the smart home experience. We are confident in our success as our capabilities align well with the connected home market needs as evidenced by our new customer activity in this space. As always, the best testament to our success is the partners that choose to work with us on their product solutions. We have won new product designs with six of the top 10 HVAC OEM companies on the planet and are working on two more. Further, the market is growing and undergoing constructive change as climate control devices are getting smarter. For example, there is a transition underway bringing more efficient product forms such as heat pumps into popularity. Our ability to quickly address these opportunities is reminiscent to the early innings of our success in the home entertainment market. I'd like to highlight a few of our activities that support our outlook. In climate control, at the Consumer Electronics Show in January, we unveiled new UEI Tide family offerings, including products that bridge to indoor air quality sensors, built-in air purifier control, and additional accessories that broaden our control utility. took the show on the road and demonstrated our full suite of innovative climate control solutions to our growing list of HVAC OEM customers in Japan, including Daikin, Toshiba Carrier, Fujitsu, LG, and Panasonic. In March, we exhibited at one of the premier events for the HVAC industry in Europe. Our tied family was once again extremely well received, generating strong interest from the leading brands in Europe. In fact, in a few short years, We have engaged 13 of the top 14 HVAC OEM brands in Europe that collectively represent over 80% of that market. Already, we have secured three active design wins with two of the top three European HVAC OEMs. With the long lead times in this segment, which we have previously discussed, these products are expected to start shipping in 2025. In home automation, during Q1, we received our first standard tide dial and tide touch thermostat orders from a leading multi-dwelling unit integrator in North America. We expect to begin product deliveries later this year. Additionally, Tide Dial is currently in consumer trials with a European utility provider. We expect to complete a successful trial and to begin shipping product to them in Q4. In home entertainment and consumer electronics, although the market has changed greatly over the last couple of years, we continue to capture market share with new product introductions at small and large operators. In Q1, we began shipping our sustainable remote control to Liberty Global. We continue to add customers on our Android remote control line, including two telecom companies in EMEA. Both have products in development that are expected to ship in Q3 of this year. We continue to see traction on the Zumo platform across the charter footprint and the Zumo TV branded platforms as this program continues to scale in the market. Regarding licensing our proprietary technology, we recently added Hisense as a licensee of our Cuterix digital rights management provisioning services. These software services are currently used by Vizio, TCL, and numerous other TV OEMs to ensure secure delivery of digital rights management keys for streaming content services on their smart TV platforms. Our Kwikset licensees in consumer electronics, such as Samsung, LG, and Sony, all announced their 2024 Smart TV product lines and will continue to ship versions of our Kwikset cloud-enabled software. Our latest version brings added value to our customers, giving them access to a better user experience, increased user engagement, and reduced onboarding and troubleshooting challenges. These long-term relationships built upon years of working together with these world-leading home entertainment companies continue to be strengthened with these feature enhancements and give us further confidence in our success going forward. Now to the financials. Brian, please go ahead. Thank you, Paul.