Universal Electronics Inc.

Good day and thank you for standing by. Welcome to Universal Electronics' fourth quarter and year-end 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 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 from Alliance Advisors Investor Relations. Please go ahead.

Thank you, Gigi, and thank you all for joining us for the Universal Electronics Fourth Quarter and Year-End 2024 Financial Results Conference Call. By now, you should have received a copy of the press release. If you've not, please contact Alliance Advisors Investor Relations 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 www.uei.com for one year. 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 continue capturing new product and new customer wins in the connected home space, particularly in climate control, HVAC, and home automation, security, and hospitality markets through the development and delivery of unique and innovative solutions, including the company's quick technologies, tied platforms, energy harvesting sensors and solutions, and excellent customer service as anticipated by management. Management's ability to manage its business and profitability through continued cost-saving initiatives, optimization of the company's manufacturing facilities, and improvements in the company's cash flows. the company's abilities to capture potential upside opportunities in the home entertainment markets, and particularly in the traditional subscription broadcasting due to its continued long lead market share, and the stabilization of ordering patterns and the importance of the company's quick set differentiation and innovative remote control and one-for-all brand design wins. 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, rising energy and freight costs, natural disasters, governmental actions, including increasing tariffs on products brought into the U.S., reducing incentives to business worldwide, the risk of doing business or operating in certain parts of the world, and 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 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 helps 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. Also, the company will no longer exclude excess manufacturing overhead costs resulting from the continued transition of its global manufacturing footprint, specifically in Mexico and Vietnam, and depreciation related to the markup from cost to fair market value of fixed assets acquired in business combinations from its adjusted non-GAAP figures. This impacts adjusted non-GAAP gross profit, gross margin, operating income or loss, income or loss before provision or benefit of income taxes, and net income or loss in the quarterly results for 2023 and 2024. There is no impact to GAAP results. A reconciliation of these measures is posted on the website in Q4 2024 quarterly results section. 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 and open the call for questions. It's now my pleasure to introduce Paul Arling. Please go ahead, sir.

Thank you, Kirsten, and thank you all for joining us today. I'm excited to report in Q4 2024, our team's efforts delivered sales growth of 13% and improved EPS by 24 cents per share compared to the fourth quarter a year ago. We exceeded both our own projections and consensus. Over the past few years, we have been executing initiatives to support new customer acquisition and long-leaf design winds to fuel ongoing sales growth, particularly in the connected home which is a large and growing market. During Q4, our connected home business increased momentum with several new products shipping, and it is beginning to scale as new orders have increased toward the tail end of the quarter. We are excited that our perseverance and commitment to this channel are starting to show results. Over the past few years, we have managed costs and optimized our manufacturing footprint, improving our profitability. The combination of these accomplishments have strengthened our financial foundation and underpin our projections for top and bottom line growth for full year 2025 and beyond. Turning to a review of our markets. In the connected home market, which includes HVAC and home automation security and hospitality, we continue to gain traction with new customers and build on existing relationships we already have across many of the top OEM brands in North America, Europe, and Asia. These include Daikin, Carrier, Vivint, Somfy, Fujitsu, Mitsubishi, and Metis. In Q4, revenues benefited from a full quarter of shipments of new products launched during Q3, as well as new products introduced during the quarter. Now we are starting to win additional projects with satisfied repeat customers, leading to a strong pipeline of new products that will fuel long-term revenue growth. Our share of the climate control market is growing. and Q4 results are evidence that we are well positioned to deliver on our long-term growth strategy. In home entertainment, including video service providers, consumer electronics, and our AV accessories retail business, TV demand increased in the second half of 2024 with shipments growing slightly across all regions. This was especially true in North America and Western Europe, though the growth in TV shipments was driven primarily at the lower end of the market. In Q4, video subscriber declines at some of our key accounts narrowed compared to prior years, reflecting new pricing and packaging of video service products introduced earlier in the year. As a result, some of our major customers increased overall order quantities during the quarter, positively impacting our Q4 performance. Many of our reasons for optimism, both near and long-term, were highlighted at the International Consumer Electronics Show in January. The event was a major success for us. We received strong interest in our new products and technologies from many of our new accounts in Connected Home, as well as existing customers who want us to bring new features and functionality to their platforms. I'll review a few of the highlights. We introduced groundbreaking QuickSet HomeSense technology. While protecting user privacy, QuickSet HomeSense adds a layer of on-device intelligence that learns from the home environment and location of connected devices and adapts to optimize device usage based on user preferences. We unveiled new capabilities in our UEI TIDE family that enhance climate control and energy management by resolving key friction points and providing on-device actionable insights. Elevating the role of smart thermostats within the home Benefits include managing multiple heating and AC systems, central, space, and other, integrated in a single controller, as well as providing optimized climate control and energy savings. We offered a sneak peek of the next-gen UEI Tide Pro platform with a larger, higher-resolution display and support for on-device AI processing and other communication protocols. The new architecture introduces an advanced software framework, enabling the development of operating systems and graphical user interfaces under a limited power budget. In our customer discussions, this climate control platform is considered the ideal solution for many of our OEM customers who are looking to bring their proprietary protocol technologies to smart thermostats to give consumers optimal HVAC system control while delivering a better predictive and preventive maintenance service that many other smart thermostats sold at retail cannot do. This new climate control platform runs UEI's latest QuickSet Widget Pro module. This high-performance processor enables complex tasks such as edge AI processing, video stream decoding, and enhanced security features to protect user data and ensure the integrity of the smart home ecosystem. We introduced QuickSet 7 SDK and the new QuickSet Cloud capabilities to further expand monetization opportunities to our OEMs through better personalization and increased user engagement. QuickSet Cloud now supports a broader range of device and content sources spanning video and audio consumption in the home. Moving toward the promise of private and intelligent homes, QuickSet 7 now learns and adapts to changes in the home to precisely target the right audience at the optimal moment, delighting the user and maximizing monetization potential for entertainment and smart home brands. In addition to CES, earlier this year, we announced our collaboration with Somfy in the connected home space. We've been working with Somfy for several years now to create innovative products and solutions that deliver better motorized shade control experience. such as their latest outdoor remote lineup and energy harvesting sensors. Consumers will benefit from enhanced comfort and convenience, including saved favorites, reduced energy consumption by adjusting interior temperature based on outside conditions, and low energy power consumption, complying with SOMFI's Act for Green requirements. With that, I'll turn the call over to Brian. Go ahead.