Universal Electronics Inc.

Good day and thank you for standing by. Welcome to the Universal Electronics Second Quarter 2025 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 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 your first speaker today, Kirsten Chapman, Alliance Advisors Investor Relations. Please go ahead.

Thank you, Angelina, and thank you all for joining us for the Universal Electronics Second Quarter 2025 Financial Results Conference Call. By now, you should have received a copy of the press release. If you have not, please contact Alliance Advisors at 415-433-3777 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 in the future financial performance of companies and cautions you that these statements are not are just projections and actual results or events may differ materially from those projections. These statements include the company's goals, focus, strategies, and opportunities, market trends including the connected home and home entertainment channels, expectations with respect to customer orders and customer demand including short-term and long-term demand, plans with respect to closing our Mexico facility including expected benefits and timing, financial projections and forecasts, including the revenue and gross profit, our ability to respond to business and regulatory changes, such as tariffs, and expectations with respect to ongoing litigation. 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 2024 annual report on Form 10-K, and the periodic and current 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 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. Joining me today are Chief Operating Officer and Interim Chief Executive Officer, Rick Carnifax, and Chief Financial Officer, Brian Hackworth. Rick will provide an overview of our business, and Brian will deliver the detailed financial results and conclusions. It's my pleasure to introduce Rick Carnifax. Please go ahead, Rick.

Thank you, Kirsten, and thank you all for joining us. I'm excited to be here leading UEI's transition to capture more of the home with our industry-leading patented wireless control technology. I joined UEI five years ago in manufacturing and operations and helped drive our footprint optimization, resulting in strong margin recovery and a return to healthy cash generation. Our foundation to bring innovation and value to our customers is fortified by our strong balance sheet. As Brian will review, we are on the right track relative to debt. Notably, we have achieved a net cash position for the first time since December 2021. In Q2, we delivered 46% revenue growth in connected home, helping to drive overall business gross margins to 29.9% and EPS of 18 cents. Year-to-date operating cash flow is also very strong at almost $18 million. We remain focused on allocating investment to profitable growth areas. particularly in connected home, where we see attractive long-term opportunities. During Q2 2025, we continued to scale revenue of core connected home accounts and collaborate with them on their next product solutions, including kicking off three new design projects with one of our major HVAC OEM accounts for release in 2026 and 2027. Also, during the quarter, we shipped a new smart home security product to be launched later this year by a new customer in the consumer DIY security and home automation space. In parallel, we are nearing completion on our standard climate control solutions, which will be delivered to customers in OEM, energy, and multi-dwelling unit channels later this year. Our customer traction gives us confidence in our long-term vision for growth in connected home, but as we stated previously, customer orders in this channel can be inconsistent if the product makes its way through to distributors, dealers, and HVAC contractors, and ultimately into consumer homes. Over time, we expect this to stabilize as we grow the number of customers and products in this channel. For the time being, this variability in order demand can and does influence quarterly revenue forecasts, which we expect to be evident in the latter half of 2025. In addition to the connected home trends we are seeing, we expect home entertainment to continue to be uncertain over the next 12 to 24 months. While we continue to develop and ship new products in North America with major telecom and pay TV operators, revenues for these new products are being offset by the impact of our value remote business in EMEA and Latin America. We expect these trends to continue in our home entertainment business overall to continue to decline into 2026 and beyond. Overall, our revenues in the first half of 2025 are strong. However, we expect total revenue to decline in the third and fourth quarters compared to the same periods last year, reflecting the inconsistency in connected home and continued pressure in home entertainment. That said, for full year 2026, we expect new and existing connected home product projections to support growth in the channel. To support both strong financial performance and funding of investments in the more attractive long-term potential of connected home, we will continue to refine our operating model and ensure the business is sized appropriately for the opportunities we see ahead. For example, having achieved strong connectivity at our facility in Vietnam, and with the current trends in home entertainment resulting in lower volume in our facility in Mexico, we have decided to optimize our footprint further. We will close our facility in Mexico and expect to complete the process by the end of this year. It is critical to customer continuity and stable financial performance that we have the flexibility to respond to business and regulatory changes, such as tariffs, that can quickly shift volumes and impact factories. We have proven to be adept at navigating similar challenges in the past, and we are confident in our ability to continue this in the future as we have built this into our supply chain through both internal capacity and external partners. We are also reviewing contribution margins and will act to reallocate resources to areas that better drive value, such as adjacent product categories in connected home and potentially complementary products and services in home entertainment. Finally, protecting our IP remains critical to UEI. I want to provide a recent update regarding the pending litigation against Roku, which was stayed in the district court. The court has ruled in our favor to consolidate our actions and move forward with the case. We will know more after our scheduling conference with the judge in late September, 2025. The judges posed many questions to both sides, which will be answered at the hearing. But this latest ruling is a very positive sign that UEI will finally be able to move forward and present our case in court. Now I'll turn it over to Brian to provide an update on our financials.