UNIVERSAL ELECTRONICS INC — Call Transcript 2025

Good afternoon. My name is Therese, and I will be your conference operator today. Now, I would like to welcome everyone to Universal Electronics' Third Quarter 2025 Financial Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker remarks, there will be a question-and-answer session. To ask a question, you will need to press star one one on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I will now turn today's conference call over to Richard Land of Alliance Advisors Investor Relations. Please go ahead. Thank you, Operator, and thank you all for joining us for the Universal Electronics Third Quarter 2025 Financial Results Conference Call. This afternoon, UEI issued a press release for the third quarter ended September 30, 2025. If you do not already have a copy of this press release, it can be found in the Investor Relations section of the company's website. This call is being broadcast live over the internet. A webcast replay of this call, including any additional updated material or 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 can be found in the press release issued today and on the website. The company undertakes no obligation to revise or update these statements to reflect events or circumstances that may arise after today's date, and we refer 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. The financial remarks will reference adjusted non-GAAP metrics. 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 provide context for the operating performance. 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 Interim Chief Financial Officer Raymond Ho. Rick will provide an overview of our business, and Raymond will deliver the detailed financial results. Rick will then open the call for questions. With that, it's my pleasure to introduce Rick Carnifax. Please go ahead, Rick. Thank you, Richard, and thank you all for joining us. We remain committed to advancing our control and sensing technologies while directing investment toward areas that drive profitable growth. As part of our channel diversification strategy, we are expanding beyond core HVAC OEM offerings, entering adjacent markets such as utilities and multi-dwelling unit property management, while also increasing our presence in the security channel. At the same time, we continue to refine our operating model to nurture long-term growth in the connected home channel and focus our home entertainment R&D on projects that offer strong returns. Innovation remains central to our strategy as we gain traction with new technologies and markets. In Q3 2025, due to right-sizing and cost controls, we delivered solid margin performance and strong cash generation while facing revenue headwinds. Revenue was $90.6 million, slightly below expectations due to temporary and structural market factors. In connected home, revenue grew 13%. Broadly in line with our expectations. However, we encountered market softness reflected in customer inventories, limiting purchases as product works its way through the channel. In home entertainment, structural challenges in Latin America and Europe persisted, while lower-than-expected television sales impacted our Asian customer volumes. As outlined in our last call in Q4 2025, we expect our quarterly revenue to decline year over year and expect to deliver full-year growth in connected home compared to 2024. Gross margin was 29.1%, and EPS was within our guidance range at $0.08. Our net cash position increased significantly this quarter by $9.1 million, reflecting disciplined execution in a challenging environment. To counter headwinds and enhance agility, we continue executing actions on cost in Q3. We began the closure of our Mexico facility, which remains on schedule. We achieved target milestones at our Vietnam facility, and production transfer is progressing as planned. We also initiated qualification and transfer processes for products that will remain in Mexico with our contract manufacturing partner in Mexicali. These steps should be wrapped up by year-end, minimizing disruption risk and ensuring continuity for key customers. We also implemented targeted reductions in force to streamline operations in August and later again in late September, and reallocated resources toward growth priorities. Additionally, we identified and eliminated fixed and variable expenses that no longer deliver the requisite value. These actions are expected to yield annualized cost savings of approximately $5 million beginning in Q4. To broaden our connected home presence, we are leveraging our TIDE Touch platform to pursue new opportunities in adjacent channels. Energy management is a growing priority in Western Europe. To meet this demand, we enhanced TIDE Touch with new features that support energy efficiency and provide utilities with actionable insights. Following two years of testing with a lead European customer, initial shipments began in Q3, with volumes expected to ramp in 2026. We are applying a similar approach to serve multi-dwelling unit property managers. By integrating interoperability with smart devices such as door locks and water leak detectors, TIDE Touch offers a turnkey solution. It delivers energy efficiency, convenience, and remote management capabilities while reducing the risk of costly failures. Official launch is planned for 2026. In home entertainment, we remain focused on high-value commercial opportunities. In Q3, we secured a new design win for our battery-less hybrid supercap remote control, which eliminates the need for replaceable batteries, reinforcing UEI's leadership in sustainable product innovation. In addition, software licensing, which carries our highest gross margin, continues to be a strong profit driver. During Q3, we secured 2026 commitments for our QuickSet Cloud platform across our three primary smart TV customers. We also added four new smart TV brands, including Sharp and Xiaomi, which will employ our digital rights management protection software services beginning in Q1 2026. Overall, innovation remains a cornerstone of UEI's long-term strategy. QuickSet homeSense, introduced at CES 2025, represents a meaningful step forward in smart home intelligence. The platform adds on-device learning that interprets environmental data and device activity to deliver personalized, real-time automation. Built on UEI's expanding knowledge graph, homeSense can detect user presence, identify anomalies, and optimize settings, making homes more efficient, secure, and intuitive. Its software-defined sensing framework can be activated via a simple firmware update on most connected devices. For example, it can automatically adjust HVAC settings based on user proximity or set the home to away mode when unoccupied. Since launch, homeSense has gained strong traction, with major HVAC brands currently in testing and home entertainment partners committed to 2026 product introductions. We will also integrate homeSense into our TIDE Touch smart thermostats, creating an optimized, privacy-driven energy management solution. Finally, regarding the ongoing litigation against Roku, as discussed on our last call, the district court has lifted the stay, ruled in our favor to consolidate actions, and proceed to trial. The trial date has been set for March 2027, which we view as a favorable timeline. Discovery is underway, and we will continue to provide updates as appropriate as the case progresses toward a jury trial. With that, I'll now turn the call over to our Interim CFO, Raymond Ho, to provide an update on our financial results. Thank you, Rick. I will review the third quarter of 2025 compared to the third quarter of 2024. Net sales were $90.6 million, down 11% from $102.1 million in the prior year period. Our connected home channel grew 13% to $29.8 million. This was driven by the strong performance from new products launched earlier this year, particularly within climate control and continued skill expansion with existing customers. Sales in home entertainment declined 20% to $60.8 million. This reflects soft demand for subscription broadcasting products in Latin America and EMEA, particularly basic remote controls at lower price points and limited advanced features. Broader industry weakness in consumer electronics, including fewer television sales among our customers, also contributes to lower remote control volumes. The retail channel performance softened as well due to elevated inventories and slower sell-through. Gross profit was $26.3 million. Or 29.1% of sales, compared to 30.1% in the prior year period. We benefited from procurement savings and favorable currency rates across Asia and EMEA. However, we experienced a temporary gross margin headwind related to tariff timing that will continue in Q4 and be resolved in 2026. In Q3, this impact reduced gross margin by approximately 120 basis points. Excluding this effect, Q3 gross margin would have exceeded our 30% target. Operating expenses decreased to $24.8 million from $28.2 million in the prior year period. Reflecting ongoing benefits of cost reduction initiatives, including headcount optimization and lower fixed or discretionary spending. SG&A was $18.2 million. Versus $21.1 million in the prior year period. R&D was $6.6 million. Compared to $7.1 million in the prior year period. Operating income reduced to $1.6 million from $2.6 million in the prior year period. Net income was $1.1 million or $0.08 per diluted share compared to $1.4 million or $0.10 per diluted share last year. Turning to cash flow and the balance sheet, we continue to make strong progress in improving our cost structure and working capital efficiency. Through the first nine months of 2025, we generated $27.8 million in operating cash flow, in which $10.1 million was generated in Q3. Our net cash position strengthened to $13.2 million as of September 30, 2025, up from $4.1 million at June 30. This marks the second consecutive quarter of positive net cash since December 2021. The improvement was driven primarily by strong receivable collection and disciplined expense management. We ended the quarter with $31.5 million of cash and $18.3 million of debt. Reflecting our continuous confidence in our long-term growth strategy, the board has authorized the repurchase of the lesser of $3.5 million. Or approximately 778,000 shares pursuant to our previously announced stock repurchase program. Now turning to guidance. For the fourth quarter of 2025, we expect net sales to range from $82 million-$92 million. This compares to $110.5 million in Q4 2024. When we recognize approximately $4 million of revenue for connected home orders produced but not yet shipped upon meeting certain U.S. GAAP criteria. This, combined with the fact we expect order patterns tied to connected home new product launches to fluctuate, contribute to the year-over-year revenue decline we anticipate in Q4 2025. Connected home sales are projected to be between $26 million-$30 million. Representing a decrease of 13%-24%. From $34.5 million last year. For the first nine months of 2025. Connected home sales grew 30%, and we still expect to finish the year with approximately 12%-16% growth versus 2024. In Q4, home entertainment sales are expected to range from $56 million-$62 million, a decline of 18%-26% versus $76 million in Q4 2024. While we do not provide gross margin guidance, we expect the tariff timing issue to persist through Q4 and be resolved in 2026. Additionally, although the closure of the plant in Mexico will enhance long-term profitability, we expect associated costs to have a modest impact on Q4 gross margin. Finally, due to the decisive actions we have taken to manage our cost structure, we expect to remain profitable in Q4 and anticipate EPS to range from $0.01-$0.11, compared to $0.20 in Q4 2024. Based on this guidance, full year 2025 is projected to be our first year of profitability since 2022. With that, I will turn the call back to Rick. Thanks, Raymond. In summary, we are focusing investments on markets and technologies where we see both near-term and long-term potential while managing through unpredictability and headwinds with operational discipline. While we continue to focus on materially improving profitability and balance sheet, we are diversifying our target markets to create value for customers, creating additional growth opportunities for our solutions, and delivering positive return for our stockholders. Looking forward, we are excited by the opportunities in our adjacent markets driven by innovative technologies, new products, and expanding partnerships. With that, Operator, please open the call for questions. Thank you. As a reminder to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from Stephen Frankel with Rosenblatt Securities. Your line is open. Good afternoon. Let me start with maybe a question that's more appropriate for the Chairman, but since he's not here, maybe you can give us some insight. You have an acting CEO, an acting CFO. Kind of where are we in the search or the decision process around getting permanent people in those slots? Sure. Good afternoon, Steve, by the way. Relative to the leadership positions, as I've been in the interim CEO role and I've been in this role, I'm acting with confidence of the board to navigate us through this process, and I will keep you updated if there's any changes to that at this time. Relative to the interim CFO position with Raymond, we are conducting an ongoing search and interviewing at this time. Okay. Now let's pivot to the business. I think the big surprise is a significant downturn in connected home, which was the path forward for the company. Maybe give us a little more insight into the dynamics of what happened in Q3 and how that affected the Q4 shipments and when you would anticipate that business to return to year-over-year growth. Yeah. I mean, relative to the connected home, I think the key is, unfortunately, we've talked about is that there is some unevenness in that order pattern as product works its way through the channel. As was highlighted in the call, while we look forward to Q4 and do see a decline, we see full year growth versus 2024. Forecasting between 12% and 16%. So while the quarter-to-quarter fluctuations remain, we still see full year momentum there. Now, relative to the broad question about addressing this unevenness, the key thing we're working on here is looking for different channels to market, right? As we have partnered with OEMs, we have also now launched a standard product, our TIDE Touch platform, that allows us a white labeling opportunity with these adjacent channels, which we highlighted utilities and MDUs. The core for us is to take this standard product and. One, increase presence within those channels and build on those opportunities, as well as continue to explore additional avenues for that product. All right. That's a multi-quarter, if not kind of a years-long process to get meaningful revenue from that channel, or has enough work been done that that's something you could get material revenue from in 2026? Yeah. It's a good question. I think the key reason we want to highlight it on this call is we've talked about development of this platform for some time, and as we've partnered with lead customers and began shipping product, I felt it was an appropriate time to start that discussion. The goal is to ramp next year. Now, obviously, this does not happen immediately. We have to build momentum with these customers with the solution. The absolute goal is to provide a smoothening out of what we've seen on the OEM channel with something more consistent with the TIDE Touch platform. It'll take some time to build, but it's exciting that we've got a couple of channels with lead customers we're working through product with. Okay. And then a couple of things for Raymond. First of all, if my memory is accurate, last quarter, you kind of said that tariffs were not really a big deal because you were shipping so much product away from the U.S. I am surprised to hear you say that it was 100 basis points or so impacting Q3. When I look at the guidance you gave, and maybe it is just trying to model on the fly during the call, I have a hard time getting to kind of the middle of your EPS range if you are going to have gross margins that are similar to Q3 and Q4. I am sorry, to Q3 and Q4. Maybe help me understand what else is changing that you did not guide to. How material is the expense reductions, for example, on a sequential basis? And. What are you assuming for a tax rate in your guidance? I can speak a little bit, Steve, on the tariff situation. As we've talked about the last couple of calls, our goal is obviously to mitigate tariff impacts where possible through a combination of negotiations with key customers as well as transition of production locations where required. We wanted to highlight the risk go forward because the timing of the tariff negotiations with the key customers and the transition of production locations is ongoing. We've mentioned before we have a partner that we've stood up, a contract manufacturer in Mexico that we're working with. As we work through these timing issues and transfer product, there's just still risks that remain. Relative to the question around the EPS, we continue to highlight the operational cost controls we put in place and the right-sizing efforts. We expect that to be a material benefit to the. EPS as we look forward. Specifically in Q4, what's your assumption on OpEx? Are they materially lower than Q3? Yes, Steve, actually. Yeah, as Rick said, our effort on optimizing headcount organization is always in progress. We expect Q4. Yeah, basically, we are still on track with that. On the OpEx side, we expect Q4 to be much lower than Q3 as well. We are looking at not only the organization, but also all the fixed costs, discretionary spending, travel. We are on track on continuing to right-size the organization. All right. Thank you. I'll let somebody else ask a question. Oh, sorry, one more, Raymond. Sorry. Customer concentration in the quarter? Okay. We had two 10% customers in the quarter. Daikin was at 20.5%, and Comcast at 14.9%. Thank you. Yep. You're welcome. Thank you. This does conclude our question and answer session. I would now like to turn it back to Mr. Carnifax for closing remarks. Sure. Yes. Thank everyone for their continued support of Universal Electronics. I'd like to note that you should come visit us and see demonstrations of our technology at CES, January 6th through 9th. Have a great day. This concludes our call. You may now disconnect.

Speaker 4: Good afternoon. My name is Therese, and I will be your conference operator today. Now, I would like to welcome everyone to Universal Electronics' Third Quarter 2025 Financial Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker remarks, there will be a question-and-answer session. To ask a question, you will need to press star one one on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I will now turn today's conference call over to Richard Land of Alliance Advisors Investor Relations. Please go ahead. Good afternoon. good afternoon My name is Therese, and I will be your conference operator today. my name is therese and i will be your conference operator today Now, I would like to welcome everyone to Universal Electronics' Third Quarter 2025 Financial Results Conference Call. now i would like to welcome everyone to universal electronics' third quarter 2025 financial results conference call All lines have been placed on mute to prevent any background noise. all lines have been placed on mute to prevent any background noise After the speaker remarks, there will be a question-and-answer session. after the speaker remarks there will be a question-and-answer session To ask a question, you will need to press star one one on your telephone. to ask a question you will need to press star one one on your telephone You will then hear an automated message advising that your hand is raised. you will then hear an automated message advising that your hand is raised To withdraw your question, please press star one one again. to withdraw your question please press star one one again Please be advised that today's conference is being recorded. please be advised that today's conference is being recorded I will now turn today's conference call over to Richard Land of Alliance Advisors Investor Relations. i will now turn today's conference call over to richard land of alliance advisors investor relations Please go ahead. please go ahead

Speaker 2: Thank you, Operator, and thank you all for joining us for the Universal Electronics Third Quarter 2025 Financial Results Conference Call. This afternoon, UEI issued a press release for the third quarter ended September 30, 2025. If you do not already have a copy of this press release, it can be found in the Investor Relations section of the company's website. This call is being broadcast live over the internet. A webcast replay of this call, including any additional updated material or 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. Thank you, Operator, and thank you all for joining us for the Universal Electronics Third Quarter 2025 Financial Results Conference Call. thank you operator and thank you all for joining us for the universal electronics third quarter 2025 financial results conference call This afternoon, UEI issued a press release for the third quarter ended September 30, 2025. this afternoon uei issued a press release for the third quarter ended september 30 2025 If you do not already have a copy of this press release, it can be found in the Investor Relations section of the company's website. if you do not already have a copy of this press release it can be found in the investor relations section of the company's website This call is being broadcast live over the internet. this call is being broadcast live over the internet A webcast replay of this call, including any additional updated material or 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. a webcast replay of this call including any additional updated material or 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. 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 can be found in the press release issued today and on the website. The company undertakes no obligation to revise or update these statements to reflect events or circumstances that may arise after today's date, and we refer 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. The financial remarks will reference adjusted non-GAAP metrics. 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 provide context for the operating performance. These statements can be found in the press release issued today and on the website. these statements can be found in the press release issued today and on the website The company undertakes no obligation to revise or update these statements to reflect events or circumstances that may arise after today's date, and we refer 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. the company undertakes no obligation to revise or update these statements to reflect events or circumstances that may arise after today's date and we refer 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 The financial remarks will reference adjusted non-GAAP metrics. the financial remarks will reference adjusted non-gaap metrics 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 provide context for the operating performance. 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 provide context for the operating performance 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 Interim Chief Financial Officer Raymond Ho. Rick will provide an overview of our business, and Raymond will deliver the detailed financial results. Rick will then open the call for questions. With that, it's my pleasure to introduce Rick Carnifax. Please go ahead, Rick. A full description and reconciliation of these adjusted non-GAAP measures versus GAAP are included in the company's press release issued today. 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 Interim Chief Financial Officer Raymond Ho. joining me today are chief operating officer and interim chief executive officer rick carnifax and interim chief financial officer raymond ho Rick will provide an overview of our business, and Raymond will deliver the detailed financial results. rick will provide an overview of our business and raymond will deliver the detailed financial results Rick will then open the call for questions. rick will then open the call for questions With that, it's my pleasure to introduce Rick Carnifax. with that it's my pleasure to introduce rick carnifax Please go ahead, Rick. please go ahead rick

Speaker 3: Thank you, Richard, and thank you all for joining us. We remain committed to advancing our control and sensing technologies while directing investment toward areas that drive profitable growth. As part of our channel diversification strategy, we are expanding beyond core HVAC OEM offerings, entering adjacent markets such as utilities and multi-dwelling unit property management, while also increasing our presence in the security channel. At the same time, we continue to refine our operating model to nurture long-term growth in the connected home channel and focus our home entertainment R&D on projects that offer strong returns. Innovation remains central to our strategy as we gain traction with new technologies and markets. In Q3 2025, due to right-sizing and cost controls, we delivered solid margin performance and strong cash generation while facing revenue headwinds. Revenue was $90.6 million, slightly below expectations due to temporary and structural market factors. Thank you, Richard, and thank you all for joining us. thank you richard and thank you all for joining us We remain committed to advancing our control and sensing technologies while directing investment toward areas that drive profitable growth. we remain committed to advancing our control and sensing technologies while directing investment toward areas that drive profitable growth As part of our channel diversification strategy, we are expanding beyond core HVAC OEM offerings, entering adjacent markets such as utilities and multi-dwelling unit property management, while also increasing our presence in the security channel. as part of our channel diversification strategy we are expanding beyond core hvac oem offerings entering adjacent markets such as utilities and multi-dwelling unit property management while also increasing our presence in the security channel At the same time, we continue to refine our operating model to nurture long-term growth in the connected home channel and focus our home entertainment R&D on projects that offer strong returns. at the same time we continue to refine our operating model to nurture long-term growth in the connected home channel and focus our home entertainment r&d on projects that offer strong returns Innovation remains central to our strategy as we gain traction with new technologies and markets. innovation remains central to our strategy as we gain traction with new technologies and markets In Q3 2025, due to right-sizing and cost controls, we delivered solid margin performance and strong cash generation while facing revenue headwinds. in q3 2025 due to right-sizing and cost controls we delivered solid margin performance and strong cash generation while facing revenue headwinds Revenue was $90.6 million, slightly below expectations due to temporary and structural market factors. revenue was $90.6 million slightly below expectations due to temporary and structural market factors In connected home, revenue grew 13%. Broadly in line with our expectations. However, we encountered market softness reflected in customer inventories, limiting purchases as product works its way through the channel. In home entertainment, structural challenges in Latin America and Europe persisted, while lower-than-expected television sales impacted our Asian customer volumes. As outlined in our last call in Q4 2025, we expect our quarterly revenue to decline year over year and expect to deliver full-year growth in connected home compared to 2024. Gross margin was 29.1%, and EPS was within our guidance range at $0.08. Our net cash position increased significantly this quarter by $9.1 million, reflecting disciplined execution in a challenging environment. To counter headwinds and enhance agility, we continue executing actions on cost in Q3. We began the closure of our Mexico facility, which remains on schedule. In connected home, revenue grew 13%. in connected home revenue grew 13% Broadly in line with our expectations. broadly in line with our expectations However, we encountered market softness reflected in customer inventories, limiting purchases as product works its way through the channel. however we encountered market softness reflected in customer inventories limiting purchases as product works its way through the channel In home entertainment, structural challenges in Latin America and Europe persisted, while lower-than-expected television sales impacted our Asian customer volumes. in home entertainment structural challenges in latin america and europe persisted while lower-than-expected television sales impacted our asian customer volumes As outlined in our last call in Q4 2025, we expect our quarterly revenue to decline year over year and expect to deliver full-year growth in connected home compared to 2024. as outlined in our last call in q4 2025 we expect our quarterly revenue to decline year over year and expect to deliver full-year growth in connected home compared to 2024 Gross margin was 29.1%, and EPS was within our guidance range at $0.08. gross margin was 29.1% and eps was within our guidance range at $0.08 Our net cash position increased significantly this quarter by $9.1 million, reflecting disciplined execution in a challenging environment. our net cash position increased significantly this quarter by $9.1 million reflecting disciplined execution in a challenging environment To counter headwinds and enhance agility, we continue executing actions on cost in Q3. to counter headwinds and enhance agility we continue executing actions on cost in q3 We began the closure of our Mexico facility, which remains on schedule. we began the closure of our mexico facility which remains on schedule We achieved target milestones at our Vietnam facility, and production transfer is progressing as planned. We also initiated qualification and transfer processes for products that will remain in Mexico with our contract manufacturing partner in Mexicali. These steps should be wrapped up by year-end, minimizing disruption risk and ensuring continuity for key customers. We also implemented targeted reductions in force to streamline operations in August and later again in late September, and reallocated resources toward growth priorities. Additionally, we identified and eliminated fixed and variable expenses that no longer deliver the requisite value. These actions are expected to yield annualized cost savings of approximately $5 million beginning in Q4. To broaden our connected home presence, we are leveraging our TIDE Touch platform to pursue new opportunities in adjacent channels. Energy management is a growing priority in Western Europe. We achieved target milestones at our Vietnam facility, and production transfer is progressing as planned. we achieved target milestones at our vietnam facility and production transfer is progressing as planned We also initiated qualification and transfer processes for products that will remain in Mexico with our contract manufacturing partner in Mexicali. we also initiated qualification and transfer processes for products that will remain in mexico with our contract manufacturing partner in mexicali These steps should be wrapped up by year-end, minimizing disruption risk and ensuring continuity for key customers. these steps should be wrapped up by year-end minimizing disruption risk and ensuring continuity for key customers We also implemented targeted reductions in force to streamline operations in August and later again in late September, and reallocated resources toward growth priorities. we also implemented targeted reductions in force to streamline operations in august and later again in late september and reallocated resources toward growth priorities Additionally, we identified and eliminated fixed and variable expenses that no longer deliver the requisite value. additionally we identified and eliminated fixed and variable expenses that no longer deliver the requisite value These actions are expected to yield annualized cost savings of approximately $5 million beginning in Q4. these actions are expected to yield annualized cost savings of approximately $5 million beginning in q4 To broaden our connected home presence, we are leveraging our TIDE Touch platform to pursue new opportunities in adjacent channels. to broaden our connected home presence we are leveraging our tide touch platform to pursue new opportunities in adjacent channels Energy management is a growing priority in Western Europe. energy management is a growing priority in western europe To meet this demand, we enhanced TIDE Touch with new features that support energy efficiency and provide utilities with actionable insights. Following two years of testing with a lead European customer, initial shipments began in Q3, with volumes expected to ramp in 2026. We are applying a similar approach to serve multi-dwelling unit property managers. By integrating interoperability with smart devices such as door locks and water leak detectors, TIDE Touch offers a turnkey solution. It delivers energy efficiency, convenience, and remote management capabilities while reducing the risk of costly failures. Official launch is planned for 2026. In home entertainment, we remain focused on high-value commercial opportunities. In Q3, we secured a new design win for our battery-less hybrid supercap remote control, which eliminates the need for replaceable batteries, reinforcing UEI's leadership in sustainable product innovation. To meet this demand, we enhanced TIDE Touch with new features that support energy efficiency and provide utilities with actionable insights. to meet this demand we enhanced tide touch with new features that support energy efficiency and provide utilities with actionable insights Following two years of testing with a lead European customer, initial shipments began in Q3, with volumes expected to ramp in 2026. following two years of testing with a lead european customer initial shipments began in q3 with volumes expected to ramp in 2026 We are applying a similar approach to serve multi-dwelling unit property managers. we are applying a similar approach to serve multi-dwelling unit property managers By integrating interoperability with smart devices such as door locks and water leak detectors, TIDE Touch offers a turnkey solution. by integrating interoperability with smart devices such as door locks and water leak detectors tide touch offers a turnkey solution It delivers energy efficiency, convenience, and remote management capabilities while reducing the risk of costly failures. it delivers energy efficiency convenience and remote management capabilities while reducing the risk of costly failures Official launch is planned for 2026. official launch is planned for 2026 In home entertainment, we remain focused on high-value commercial opportunities. in home entertainment we remain focused on high-value commercial opportunities In Q3, we secured a new design win for our battery-less hybrid supercap remote control, which eliminates the need for replaceable batteries, reinforcing UEI's leadership in sustainable product innovation. in q3 we secured a new design win for our battery-less hybrid supercap remote control which eliminates the need for replaceable batteries reinforcing uei's leadership in sustainable product innovation In addition, software licensing, which carries our highest gross margin, continues to be a strong profit driver. During Q3, we secured 2026 commitments for our QuickSet Cloud platform across our three primary smart TV customers. We also added four new smart TV brands, including Sharp and Xiaomi, which will employ our digital rights management protection software services beginning in Q1 2026. Overall, innovation remains a cornerstone of UEI's long-term strategy. QuickSet homeSense, introduced at CES 2025, represents a meaningful step forward in smart home intelligence. The platform adds on-device learning that interprets environmental data and device activity to deliver personalized, real-time automation. Built on UEI's expanding knowledge graph, homeSense can detect user presence, identify anomalies, and optimize settings, making homes more efficient, secure, and intuitive. Its software-defined sensing framework can be activated via a simple firmware update on most connected devices. In addition, software licensing, which carries our highest gross margin, continues to be a strong profit driver. in addition software licensing which carries our highest gross margin continues to be a strong profit driver During Q3, we secured 2026 commitments for our QuickSet Cloud platform across our three primary smart TV customers. during q3 we secured 2026 commitments for our quickset cloud platform across our three primary smart tv customers We also added four new smart TV brands, including Sharp and Xiaomi, which will employ our digital rights management protection software services beginning in Q1 2026. we also added four new smart tv brands including sharp and xiaomi which will employ our digital rights management protection software services beginning in q1 2026 Overall, innovation remains a cornerstone of UEI's long-term strategy. overall innovation remains a cornerstone of uei's long-term strategy QuickSet homeSense, introduced at CES 2025, represents a meaningful step forward in smart home intelligence. quickset homesense introduced at ces 2025 represents a meaningful step forward in smart home intelligence The platform adds on-device learning that interprets environmental data and device activity to deliver personalized, real-time automation. the platform adds on-device learning that interprets environmental data and device activity to deliver personalized real-time automation Built on UEI's expanding knowledge graph, homeSense can detect user presence, identify anomalies, and optimize settings, making homes more efficient, secure, and intuitive. built on uei's expanding knowledge graph homesense can detect user presence identify anomalies and optimize settings making homes more efficient secure and intuitive Its software-defined sensing framework can be activated via a simple firmware update on most connected devices. its software-defined sensing framework can be activated via a simple firmware update on most connected devices For example, it can automatically adjust HVAC settings based on user proximity or set the home to away mode when unoccupied. Since launch, homeSense has gained strong traction, with major HVAC brands currently in testing and home entertainment partners committed to 2026 product introductions. We will also integrate homeSense into our TIDE Touch smart thermostats, creating an optimized, privacy-driven energy management solution. Finally, regarding the ongoing litigation against Roku, as discussed on our last call, the district court has lifted the stay, ruled in our favor to consolidate actions, and proceed to trial. The trial date has been set for March 2027, which we view as a favorable timeline. Discovery is underway, and we will continue to provide updates as appropriate as the case progresses toward a jury trial. With that, I'll now turn the call over to our Interim CFO, Raymond Ho, to provide an update on our financial results. For example, it can automatically adjust HVAC settings based on user proximity or set the home to away mode when unoccupied. for example it can automatically adjust hvac settings based on user proximity or set the home to away mode when unoccupied Since launch, homeSense has gained strong traction, with major HVAC brands currently in testing and home entertainment partners committed to 2026 product introductions. since launch homesense has gained strong traction with major hvac brands currently in testing and home entertainment partners committed to 2026 product introductions We will also integrate homeSense into our TIDE Touch smart thermostats, creating an optimized, privacy-driven energy management solution. we will also integrate homesense into our tide touch smart thermostats creating an optimized privacy-driven energy management solution Finally, regarding the ongoing litigation against Roku, as discussed on our last call, the district court has lifted the stay, ruled in our favor to consolidate actions, and proceed to trial. finally regarding the ongoing litigation against roku as discussed on our last call the district court has lifted the stay ruled in our favor to consolidate actions and proceed to trial The trial date has been set for March 2027, which we view as a favorable timeline. the trial date has been set for march 2027 which we view as a favorable timeline Discovery is underway, and we will continue to provide updates as appropriate as the case progresses toward a jury trial. discovery is underway and we will continue to provide updates as appropriate as the case progresses toward a jury trial With that, I'll now turn the call over to our Interim CFO, Raymond Ho, to provide an update on our financial results. with that i'll now turn the call over to our interim cfo raymond ho to provide an update on our financial results

Speaker 1: Thank you, Rick. I will review the third quarter of 2025 compared to the third quarter of 2024. Net sales were $90.6 million, down 11% from $102.1 million in the prior year period. Our connected home channel grew 13% to $29.8 million. This was driven by the strong performance from new products launched earlier this year, particularly within climate control and continued skill expansion with existing customers. Sales in home entertainment declined 20% to $60.8 million. This reflects soft demand for subscription broadcasting products in Latin America and EMEA, particularly basic remote controls at lower price points and limited advanced features. Broader industry weakness in consumer electronics, including fewer television sales among our customers, also contributes to lower remote control volumes. The retail channel performance softened as well due to elevated inventories and slower sell-through. Gross profit was $26.3 million. Thank you, Rick. thank you rick I will review the third quarter of 2025 compared to the third quarter of 2024. i will review the third quarter of 2025 compared to the third quarter of 2024 Net sales were $90.6 million, down 11% from $102.1 million in the prior year period. net sales were $90.6 million down 11% from $102.1 million in the prior year period Our connected home channel grew 13% to $29.8 million. our connected home channel grew 13% to $29.8 million This was driven by the strong performance from new products launched earlier this year, particularly within climate control and continued skill expansion with existing customers. this was driven by the strong performance from new products launched earlier this year particularly within climate control and continued skill expansion with existing customers Sales in home entertainment declined 20% to $60.8 million. sales in home entertainment declined 20% to $60.8 million This reflects soft demand for subscription broadcasting products in Latin America and EMEA, particularly basic remote controls at lower price points and limited advanced features. this reflects soft demand for subscription broadcasting products in latin america and emea particularly basic remote controls at lower price points and limited advanced features Broader industry weakness in consumer electronics, including fewer television sales among our customers, also contributes to lower remote control volumes. broader industry weakness in consumer electronics including fewer television sales among our customers also contributes to lower remote control volumes The retail channel performance softened as well due to elevated inventories and slower sell-through. the retail channel performance softened as well due to elevated inventories and slower sell-through Gross profit was $26.3 million. gross profit was $26.3 million Or 29.1% of sales, compared to 30.1% in the prior year period. We benefited from procurement savings and favorable currency rates across Asia and EMEA. However, we experienced a temporary gross margin headwind related to tariff timing that will continue in Q4 and be resolved in 2026. In Q3, this impact reduced gross margin by approximately 120 basis points. Excluding this effect, Q3 gross margin would have exceeded our 30% target. Operating expenses decreased to $24.8 million from $28.2 million in the prior year period. Reflecting ongoing benefits of cost reduction initiatives, including headcount optimization and lower fixed or discretionary spending. SG&A was $18.2 million. Versus $21.1 million in the prior year period. R&D was $6.6 million. Compared to $7.1 million in the prior year period. Operating income reduced to $1.6 million from $2.6 million in the prior year period. Or 29.1% of sales, compared to 30.1% in the prior year period. or 29.1% of sales compared to 30.1% in the prior year period We benefited from procurement savings and favorable currency rates across Asia and EMEA. we benefited from procurement savings and favorable currency rates across asia and emea However, we experienced a temporary gross margin headwind related to tariff timing that will continue in Q4 and be resolved in 2026. however we experienced a temporary gross margin headwind related to tariff timing that will continue in q4 and be resolved in 2026 In Q3, this impact reduced gross margin by approximately 120 basis points. in q3 this impact reduced gross margin by approximately 120 basis points Excluding this effect, Q3 gross margin would have exceeded our 30% target. excluding this effect q3 gross margin would have exceeded our 30% target Operating expenses decreased to $24.8 million from $28.2 million in the prior year period. operating expenses decreased to $24.8 million from $28.2 million in the prior year period Reflecting ongoing benefits of cost reduction initiatives, including headcount optimization and lower fixed or discretionary spending. reflecting ongoing benefits of cost reduction initiatives including headcount optimization and lower fixed or discretionary spending SG&A was $18.2 million. sg&a was $18.2 million Versus $21.1 million in the prior year period. versus $21.1 million in the prior year period R&D was $6.6 million. r&d was $6.6 million Compared to $7.1 million in the prior year period. compared to $7.1 million in the prior year period Operating income reduced to $1.6 million from $2.6 million in the prior year period. operating income reduced to $1.6 million from $2.6 million in the prior year period Net income was $1.1 million or $0.08 per diluted share compared to $1.4 million or $0.10 per diluted share last year. Turning to cash flow and the balance sheet, we continue to make strong progress in improving our cost structure and working capital efficiency. Through the first nine months of 2025, we generated $27.8 million in operating cash flow, in which $10.1 million was generated in Q3. Our net cash position strengthened to $13.2 million as of September 30, 2025, up from $4.1 million at June 30. This marks the second consecutive quarter of positive net cash since December 2021. The improvement was driven primarily by strong receivable collection and disciplined expense management. We ended the quarter with $31.5 million of cash and $18.3 million of debt. Reflecting our continuous confidence in our long-term growth strategy, the board has authorized the repurchase of the lesser of $3.5 million. Net income was $1.1 million or $0.08 per diluted share compared to $1.4 million or $0.10 per diluted share last year. net income was $1.1 million or $0.08 per diluted share compared to $1.4 million or $0.10 per diluted share last year Turning to cash flow and the balance sheet, we continue to make strong progress in improving our cost structure and working capital efficiency. turning to cash flow and the balance sheet we continue to make strong progress in improving our cost structure and working capital efficiency Through the first nine months of 2025, we generated $27.8 million in operating cash flow, in which $10.1 million was generated in Q3. through the first nine months of 2025 we generated $27.8 million in operating cash flow in which $10.1 million was generated in q3 Our net cash position strengthened to $13.2 million as of September 30, 2025, up from $4.1 million at June 30. our net cash position strengthened to $13.2 million as of september 30 2025 up from $4.1 million at june 30 This marks the second consecutive quarter of positive net cash since December 2021. this marks the second consecutive quarter of positive net cash since december 2021 The improvement was driven primarily by strong receivable collection and disciplined expense management. the improvement was driven primarily by strong receivable collection and disciplined expense management We ended the quarter with $31.5 million of cash and $18.3 million of debt. we ended the quarter with $31.5 million of cash and $18.3 million of debt Reflecting our continuous confidence in our long-term growth strategy, the board has authorized the repurchase of the lesser of $3.5 million. reflecting our continuous confidence in our long-term growth strategy the board has authorized the repurchase of the lesser of $3.5 million Or approximately 778,000 shares pursuant to our previously announced stock repurchase program. Now turning to guidance. For the fourth quarter of 2025, we expect net sales to range from $82 million-$92 million. This compares to $110.5 million in Q4 2024. When we recognize approximately $4 million of revenue for connected home orders produced but not yet shipped upon meeting certain U.S. GAAP criteria. This, combined with the fact we expect order patterns tied to connected home new product launches to fluctuate, contribute to the year-over-year revenue decline we anticipate in Q4 2025. Connected home sales are projected to be between $26 million-$30 million. Representing a decrease of 13%-24%. From $34.5 million last year. For the first nine months of 2025. Connected home sales grew 30%, and we still expect to finish the year with approximately 12%-16% growth versus 2024. Or approximately 778,000 shares pursuant to our previously announced stock repurchase program. or approximately 778,000 shares pursuant to our previously announced stock repurchase program Now turning to guidance. now turning to guidance For the fourth quarter of 2025, we expect net sales to range from $82 million-$92 million. for the fourth quarter of 2025 we expect net sales to range from $82 million-$92 million This compares to $110.5 million in Q4 2024. this compares to $110.5 million in q4 2024 When we recognize approximately $4 million of revenue for connected home orders produced but not yet shipped upon meeting certain U.S. when we recognize approximately $4 million of revenue for connected home orders produced but not yet shipped upon meeting certain u.s GAAP criteria. gaap criteria This, combined with the fact we expect order patterns tied to connected home new product launches to fluctuate, contribute to the year-over-year revenue decline we anticipate in Q4 2025. this combined with the fact we expect order patterns tied to connected home new product launches to fluctuate contribute to the year-over-year revenue decline we anticipate in q4 2025 Connected home sales are projected to be between $26 million-$30 million. connected home sales are projected to be between $26 million-$30 million Representing a decrease of 13%-24%. representing a decrease of 13%-24% From $34.5 million last year. from $34.5 million last year For the first nine months of 2025. for the first nine months of 2025 Connected home sales grew 30%, and we still expect to finish the year with approximately 12%-16% growth versus 2024. connected home sales grew 30% and we still expect to finish the year with approximately 12%-16% growth versus 2024 In Q4, home entertainment sales are expected to range from $56 million-$62 million, a decline of 18%-26% versus $76 million in Q4 2024. While we do not provide gross margin guidance, we expect the tariff timing issue to persist through Q4 and be resolved in 2026. Additionally, although the closure of the plant in Mexico will enhance long-term profitability, we expect associated costs to have a modest impact on Q4 gross margin. Finally, due to the decisive actions we have taken to manage our cost structure, we expect to remain profitable in Q4 and anticipate EPS to range from $0.01-$0.11, compared to $0.20 in Q4 2024. Based on this guidance, full year 2025 is projected to be our first year of profitability since 2022. With that, I will turn the call back to Rick. In Q4, home entertainment sales are expected to range from $56 million-$62 million, a decline of 18%-26% versus $76 million in Q4 2024. in q4 home entertainment sales are expected to range from $56 million-$62 million a decline of 18%-26% versus $76 million in q4 2024 While we do not provide gross margin guidance, we expect the tariff timing issue to persist through Q4 and be resolved in 2026. while we do not provide gross margin guidance we expect the tariff timing issue to persist through q4 and be resolved in 2026 Additionally, although the closure of the plant in Mexico will enhance long-term profitability, we expect associated costs to have a modest impact on Q4 gross margin. additionally although the closure of the plant in mexico will enhance long-term profitability we expect associated costs to have a modest impact on q4 gross margin Finally, due to the decisive actions we have taken to manage our cost structure, we expect to remain profitable in Q4 and anticipate EPS to range from $0.01-$0.11, compared to $0.20 in Q4 2024. finally due to the decisive actions we have taken to manage our cost structure we expect to remain profitable in q4 and anticipate eps to range from $0.01-$0.11 compared to $0.20 in q4 2024 Based on this guidance, full year 2025 is projected to be our first year of profitability since 2022. based on this guidance full year 2025 is projected to be our first year of profitability since 2022 With that, I will turn the call back to Rick. with that i will turn the call back to rick

Speaker 3: Thanks, Raymond. In summary, we are focusing investments on markets and technologies where we see both near-term and long-term potential while managing through unpredictability and headwinds with operational discipline. While we continue to focus on materially improving profitability and balance sheet, we are diversifying our target markets to create value for customers, creating additional growth opportunities for our solutions, and delivering positive return for our stockholders. Looking forward, we are excited by the opportunities in our adjacent markets driven by innovative technologies, new products, and expanding partnerships. With that, Operator, please open the call for questions. Thanks, Raymond. thanks raymond In summary, we are focusing investments on markets and technologies where we see both near-term and long-term potential while managing through unpredictability and headwinds with operational discipline. in summary we are focusing investments on markets and technologies where we see both near-term and long-term potential while managing through unpredictability and headwinds with operational discipline While we continue to focus on materially improving profitability and balance sheet, we are diversifying our target markets to create value for customers, creating additional growth opportunities for our solutions, and delivering positive return for our stockholders. while we continue to focus on materially improving profitability and balance sheet we are diversifying our target markets to create value for customers creating additional growth opportunities for our solutions and delivering positive return for our stockholders Looking forward, we are excited by the opportunities in our adjacent markets driven by innovative technologies, new products, and expanding partnerships. looking forward we are excited by the opportunities in our adjacent markets driven by innovative technologies new products and expanding partnerships With that, Operator, please open the call for questions. with that operator please open the call for questions

Speaker 4: Thank you. As a reminder to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from Stephen Frankel with Rosenblatt Securities. Your line is open. Thank you. thank you As a reminder to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. as a reminder to ask a question you will need to press star one one on your telephone and wait for your name to be announced To withdraw your question, please press star one one again. to withdraw your question please press star one one again Please stand by while we compile the Q&A roster. please stand by while we compile the q&a roster Our first question comes from Stephen Frankel with Rosenblatt Securities. our first question comes from stephen frankel with rosenblatt securities Your line is open. your line is open

Speaker 5: Good afternoon. Let me start with maybe a question that's more appropriate for the Chairman, but since he's not here, maybe you can give us some insight. You have an acting CEO, an acting CFO. Kind of where are we in the search or the decision process around getting permanent people in those slots? Good afternoon. good afternoon Let me start with maybe a question that's more appropriate for the Chairman, but since he's not here, maybe you can give us some insight. let me start with maybe a question that's more appropriate for the chairman but since he's not here maybe you can give us some insight You have an acting CEO, an acting CFO. you have an acting ceo an acting cfo Kind of where are we in the search or the decision process around getting permanent people in those slots? kind of where are we in the search or the decision process around getting permanent people in those slots

Speaker 3: Sure. Good afternoon, Steve, by the way. Relative to the leadership positions, as I've been in the interim CEO role and I've been in this role, I'm acting with confidence of the board to navigate us through this process, and I will keep you updated if there's any changes to that at this time. Relative to the interim CFO position with Raymond, we are conducting an ongoing search and interviewing at this time. Sure. sure Good afternoon, Steve, by the way. good afternoon steve by the way Relative to the leadership positions, as I've been in the interim CEO role and I've been in this role, I'm acting with confidence of the board to navigate us through this process, and I will keep you updated if there's any changes to that at this time. relative to the leadership positions as i've been in the interim ceo role and i've been in this role i'm acting with confidence of the board to navigate us through this process and i will keep you updated if there's any changes to that at this time Relative to the interim CFO position with Raymond, we are conducting an ongoing search and interviewing at this time. relative to the interim cfo position with raymond we are conducting an ongoing search and interviewing at this time

Speaker 5: Okay. Now let's pivot to the business. I think the big surprise is a significant downturn in connected home, which was the path forward for the company. Maybe give us a little more insight into the dynamics of what happened in Q3 and how that affected the Q4 shipments and when you would anticipate that business to return to year-over-year growth. Okay. okay Now let's pivot to the business. now let's pivot to the business I think the big surprise is a significant downturn in connected home, which was the path forward for the company. i think the big surprise is a significant downturn in connected home which was the path forward for the company Maybe give us a little more insight into the dynamics of what happened in Q3 and how that affected the Q4 shipments and when you would anticipate that business to return to year-over-year growth. maybe give us a little more insight into the dynamics of what happened in q3 and how that affected the q4 shipments and when you would anticipate that business to return to year-over-year growth

Speaker 3: Yeah. I mean, relative to the connected home, I think the key is, unfortunately, we've talked about is that there is some unevenness in that order pattern as product works its way through the channel. As was highlighted in the call, while we look forward to Q4 and do see a decline, we see full year growth versus 2024. Forecasting between 12% and 16%. So while the quarter-to-quarter fluctuations remain, we still see full year momentum there. Now, relative to the broad question about addressing this unevenness, the key thing we're working on here is looking for different channels to market, right? As we have partnered with OEMs, we have also now launched a standard product, our TIDE Touch platform, that allows us a white labeling opportunity with these adjacent channels, which we highlighted utilities and MDUs. The core for us is to take this standard product and. Yeah. yeah I mean, relative to the connected home, I think the key is, unfortunately, we've talked about is that there is some unevenness in that order pattern as product works its way through the channel. i mean relative to the connected home i think the key is unfortunately we've talked about is that there is some unevenness in that order pattern as product works its way through the channel As was highlighted in the call, while we look forward to Q4 and do see a decline, we see full year growth versus 2024. as was highlighted in the call while we look forward to q4 and do see a decline we see full year growth versus 2024 Forecasting between 12% and 16%. forecasting between 12% and 16% So while the quarter-to-quarter fluctuations remain, we still see full year momentum there. so while the quarter-to-quarter fluctuations remain we still see full year momentum there Now, relative to the broad question about addressing this unevenness, the key thing we're working on here is looking for different channels to market, right? now relative to the broad question about addressing this unevenness the key thing we're working on here is looking for different channels to market right As we have partnered with OEMs, we have also now launched a standard product, our TIDE Touch platform, that allows us a white labeling opportunity with these adjacent channels, which we highlighted utilities and MDUs. as we have partnered with oems we have also now launched a standard product our tide touch platform that allows us a white labeling opportunity with these adjacent channels which we highlighted utilities and mdus The core for us is to take this standard product and. the core for us is to take this standard product and One, increase presence within those channels and build on those opportunities, as well as continue to explore additional avenues for that product. One, increase presence within those channels and build on those opportunities, as well as continue to explore additional avenues for that product. one increase presence within those channels and build on those opportunities as well as continue to explore additional avenues for that product

Speaker 5: All right. That's a multi-quarter, if not kind of a years-long process to get meaningful revenue from that channel, or has enough work been done that that's something you could get material revenue from in 2026? All right. all right That's a multi-quarter, if not kind of a years-long process to get meaningful revenue from that channel, or has enough work been done that that's something you could get material revenue from in 2026? that's a multi-quarter if not kind of a years-long process to get meaningful revenue from that channel or has enough work been done that that's something you could get material revenue from in 2026

Speaker 3: Yeah. It's a good question. I think the key reason we want to highlight it on this call is we've talked about development of this platform for some time, and as we've partnered with lead customers and began shipping product, I felt it was an appropriate time to start that discussion. The goal is to ramp next year. Now, obviously, this does not happen immediately. We have to build momentum with these customers with the solution. The absolute goal is to provide a smoothening out of what we've seen on the OEM channel with something more consistent with the TIDE Touch platform. It'll take some time to build, but it's exciting that we've got a couple of channels with lead customers we're working through product with. Yeah. yeah It's a good question. it's a good question I think the key reason we want to highlight it on this call is we've talked about development of this platform for some time, and as we've partnered with lead customers and began shipping product, I felt it was an appropriate time to start that discussion. i think the key reason we want to highlight it on this call is we've talked about development of this platform for some time and as we've partnered with lead customers and began shipping product i felt it was an appropriate time to start that discussion The goal is to ramp next year. the goal is to ramp next year Now, obviously, this does not happen immediately. now obviously this does not happen immediately We have to build momentum with these customers with the solution. we have to build momentum with these customers with the solution The absolute goal is to provide a smoothening out of what we've seen on the OEM channel with something more consistent with the TIDE Touch platform. the absolute goal is to provide a smoothening out of what we've seen on the oem channel with something more consistent with the tide touch platform It'll take some time to build, but it's exciting that we've got a couple of channels with lead customers we're working through product with. it'll take some time to build but it's exciting that we've got a couple of channels with lead customers we're working through product with

Speaker 5: Okay. And then a couple of things for Raymond. First of all, if my memory is accurate, last quarter, you kind of said that tariffs were not really a big deal because you were shipping so much product away from the U.S. I am surprised to hear you say that it was 100 basis points or so impacting Q3. When I look at the guidance you gave, and maybe it is just trying to model on the fly during the call, I have a hard time getting to kind of the middle of your EPS range if you are going to have gross margins that are similar to Q3 and Q4. I am sorry, to Q3 and Q4. Maybe help me understand what else is changing that you did not guide to. How material is the expense reductions, for example, on a sequential basis? And. Okay. okay And then a couple of things for Raymond. and then a couple of things for raymond First of all, if my memory is accurate, last quarter, you kind of said that tariffs were not really a big deal because you were shipping so much product away from the U.S. first of all if my memory is accurate last quarter you kind of said that tariffs were not really a big deal because you were shipping so much product away from the u.s I am surprised to hear you say that it was 100 basis points or so impacting Q3. i am surprised to hear you say that it was 100 basis points or so impacting q3 When I look at the guidance you gave, and maybe it is just trying to model on the fly during the call, I have a hard time getting to kind of the middle of your EPS range if you are going to have gross margins that are similar to Q3 and Q4. I am sorry, to Q3 and Q4. when i look at the guidance you gave and maybe it is just trying to model on the fly during the call i have a hard time getting to kind of the middle of your eps range if you are going to have gross margins that are similar to q3 and q4. i am sorry to q3 and q4 Maybe help me understand what else is changing that you did not guide to. maybe help me understand what else is changing that you did not guide to How material is the expense reductions, for example, on a sequential basis? how material is the expense reductions for example on a sequential basis And. and What are you assuming for a tax rate in your guidance? What are you assuming for a tax rate in your guidance? what are you assuming for a tax rate in your guidance

Speaker 3: I can speak a little bit, Steve, on the tariff situation. As we've talked about the last couple of calls, our goal is obviously to mitigate tariff impacts where possible through a combination of negotiations with key customers as well as transition of production locations where required. We wanted to highlight the risk go forward because the timing of the tariff negotiations with the key customers and the transition of production locations is ongoing. We've mentioned before we have a partner that we've stood up, a contract manufacturer in Mexico that we're working with. As we work through these timing issues and transfer product, there's just still risks that remain. Relative to the question around the EPS, we continue to highlight the operational cost controls we put in place and the right-sizing efforts. We expect that to be a material benefit to the. I can speak a little bit, Steve, on the tariff situation. i can speak a little bit steve on the tariff situation As we've talked about the last couple of calls, our goal is obviously to mitigate tariff impacts where possible through a combination of negotiations with key customers as well as transition of production locations where required. as we've talked about the last couple of calls our goal is obviously to mitigate tariff impacts where possible through a combination of negotiations with key customers as well as transition of production locations where required We wanted to highlight the risk go forward because the timing of the tariff negotiations with the key customers and the transition of production locations is ongoing. we wanted to highlight the risk go forward because the timing of the tariff negotiations with the key customers and the transition of production locations is ongoing We've mentioned before we have a partner that we've stood up, a contract manufacturer in Mexico that we're working with. we've mentioned before we have a partner that we've stood up a contract manufacturer in mexico that we're working with As we work through these timing issues and transfer product, there's just still risks that remain. as we work through these timing issues and transfer product there's just still risks that remain Relative to the question around the EPS, we continue to highlight the operational cost controls we put in place and the right-sizing efforts. relative to the question around the eps we continue to highlight the operational cost controls we put in place and the right-sizing efforts We expect that to be a material benefit to the. we expect that to be a material benefit to the EPS as we look forward. EPS as we look forward. eps as we look forward

Speaker 5: Specifically in Q4, what's your assumption on OpEx? Are they materially lower than Q3? Specifically in Q4, what's your assumption on OpEx? specifically in q4 what's your assumption on opex Are they materially lower than Q3? are they materially lower than q3

Speaker 1: Yes, Steve, actually. Yeah, as Rick said, our effort on optimizing headcount organization is always in progress. We expect Q4. Yeah, basically, we are still on track with that. On the OpEx side, we expect Q4 to be much lower than Q3 as well. We are looking at not only the organization, but also all the fixed costs, discretionary spending, travel. We are on track on continuing to right-size the organization. Yes, Steve, actually. yes steve actually Yeah, as Rick said, our effort on optimizing headcount organization is always in progress. yeah as rick said our effort on optimizing headcount organization is always in progress We expect Q4. we expect q4 Yeah, basically, we are still on track with that. yeah basically we are still on track with that On the OpEx side, we expect Q4 to be much lower than Q3 as well. on the opex side we expect q4 to be much lower than q3 as well We are looking at not only the organization, but also all the fixed costs, discretionary spending, travel. we are looking at not only the organization but also all the fixed costs discretionary spending travel We are on track on continuing to right-size the organization. we are on track on continuing to right-size the organization

Speaker 5: All right. Thank you. I'll let somebody else ask a question. Oh, sorry, one more, Raymond. Sorry. Customer concentration in the quarter? All right. all right Thank you. thank you I'll let somebody else ask a question. i'll let somebody else ask a question Oh, sorry, one more, Raymond. oh sorry one more raymond Sorry. sorry Customer concentration in the quarter? customer concentration in the quarter

Speaker 1: Okay. We had two 10% customers in the quarter. Daikin was at 20.5%, and Comcast at 14.9%. Okay. okay We had two 10% customers in the quarter. we had two 10% customers in the quarter Daikin was at 20.5%, and Comcast at 14.9%. daikin was at 20.5% and comcast at 14.9%

Speaker 5: Thank you. Thank you. thank you

Speaker 1: Yep. You're welcome. Yep. yep You're welcome. you're welcome

Speaker 4: Thank you. This does conclude our question and answer session. I would now like to turn it back to Mr. Carnifax for closing remarks. Thank you. thank you This does conclude our question and answer session. this does conclude our question and answer session I would now like to turn it back to Mr. Carnifax for closing remarks. i would now like to turn it back to mr carnifax for closing remarks

Speaker 3: Sure. Yes. Thank everyone for their continued support of Universal Electronics. I'd like to note that you should come visit us and see demonstrations of our technology at CES, January 6th through 9th. Have a great day. Sure. sure Yes. yes Thank everyone for their continued support of Universal Electronics. thank everyone for their continued support of universal electronics I'd like to note that you should come visit us and see demonstrations of our technology at CES, January 6th through 9th. i'd like to note that you should come visit us and see demonstrations of our technology at ces january 6th through 9th Have a great day. have a great day

Speaker 4: This concludes our call. You may now disconnect. This concludes our call. this concludes our call You may now disconnect. you may now disconnect