Q1 2025 Universal Electronics Inc Earnings Call
Good afternoon. My name is Kelly and I will be your conference operator today.
Kelly: My name is Kelly and I will be your conference operator today.
Kelly: Now I would like to welcome everyone to Universal Electronics' first quarter 2025 financial results conference call. All lines have been placed on mute to prevent any background noise.
Now I would like to welcome everyone to Universal Electronics' first quarter 'twenty 25 financial results conference call all.
All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session by pressing star one to enter the queue.
Kelly: After the speaker's remarks, there will be a question and answer session by pressing star one to enter the queue.
Kirsten Chapman: I will now turn today's conference over to Kirsten Chapman of Alliance Advisors Investor Relations. Please go ahead.
I'll now turn todays conference over to Kirsten Chapman of Alliance Advisors Investor Relations. Please go ahead.
Kirsten Chapman: Thank you, Kelly. And thank you all for joining us for the Universal Electronics First Quarter 2025 Financial Results Conference Call. By now you should have received a copy of the press release.
Speaker Change: Thank you Kelly and thank you all for joining us for the Universal Electronics first quarter 2025 financial results Conference call by now you Should've received a copy of the press release. If you have not please contact alliance advisors Investor Relations at 41543337, and 77 or visit the Investor Relations section of the website.
Kirsten Chapman: If you have 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.
Speaker Change: This call is being broadcast live over the Internet a webcast replay of this call, including any additional updated material nonpublic information that might be discussed during this call will be available on the company's website at www Dot <unk> dot com for one year.
Kirsten Chapman: 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 when connected home space, resulting in product revenue growth, particularly through the development and delivery of unique and innovative solutions, including the company's new energy-harvesting sensors and remote control solutions. continued focus on the company's R&D spend towards projects that translate into new revenue streams. The stabilization of traditional subscription broadcasting business, leading to a more predictable revenue stream.
Speaker Change: During this call management may make forward looking statements regarding future events and the future financial performance of the company cautions you that these statements are just projections and actual results.
Speaker Change: Or events may differ materially from those projections. These statements include the company's ability to continue capturing new product and new customer wins and connected home space, resulting in product revenue growth, particularly through the development and delivery of unique and innovative solutions, including the Companys, new energy harvesting sensors and remote.
Speaker Change: Control solutions.
Speaker Change: Continued focus on the company's R&D spend towards projects that translate into new revenue streams.
Speaker Change: The stabilization of traditional subscription broadcasting business, leading to a more predictable revenue stream. The continued strength of the U S dollar as compared to China, and Vietnam functional currencies.
Kirsten Chapman: The continued strength of the U.S. dollar as compared to China's and Vietnam's functional currency. Management's ability to continue managing its business profitably through continued improvements in the company's cost structures, optimizing the company's manufacturing facilities and improving its cash flows. Management's ability to manage and mitigate the effects that tariffs could have on the company's profitability through price increases and other efforts. The effects of the company's stock repurchase program may have on its stock price and value.
Speaker Change: Management's ability to continue managing its business and profitably through continued improvements in the company's cost structures optimizing the company's manufacturing facilities and improving its cash flows management's ability to manage and mitigate the effects that tariffs could have on the company's profitability through price increases and other efforts.
Speaker Change: The effects of the company's stock repurchase program may have on our stock price and value.
Kirsten Chapman: 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 in spending, rising energy and freight costs, natural disasters, governmental actions including increasing domestic and retaliatory tariffs, reducing incentives to businesses worldwide, the risk of doing business or operating in certain parts of the world, and political unrest including war, terrorist activities or other hostilities.
Speaker Change: And the direct and indirect impact the company may experience with respect to our business and financial results stemming from the continued economic uncertainty affecting consumers' confidence and spending rising energy and freight cost natural disasters governmental actions, including increasing domestic and regulatory tariffs reducing.
Speaker Change: Incentives to business.
Speaker Change: Worldwide.
Speaker Change: The risk of doing business or operating in certain parts of the world and political unrest, including war terrorist activities or other hostilities.
Kirsten Chapman: 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.
Speaker Change: The company undertakes no obligation to revise or update these statements to reflect events or circumstances that may arise. After today's date or 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.
Kirsten Chapman: 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 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 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 release issued today.
Speaker Change: 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 <unk> core operating <unk>.
Speaker Change: Our financial performance and business trends consistent with how management evaluates such performance and trends.
Speaker Change: In addition management believes these measures facilitate comparisons with 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 issued today.
Kirsten Chapman: Joining me today are the Office of CEO, which includes Chief Financial Officer Bryan Hackworth, Senior Vice President, Corporate Planning and Strategy, Ramzi Amari, and newly promoted Chief Operating Officer, Rick Karnefax. Ramzi will provide an overview of our channels. Bryan will deliver the detailed financial results and conclusion.
Speaker Change: Joining me today are the opposite CEO, which includes Chief Financial Officer, Bryan Hackworth, Senior Vice President corporate planning and strategy Ramzi Mari and newly promoted Chief operating officer, Rick part effects Ramsay will provide an overview of our channel Brian will deliver the detailed financial results in conclusion, then roque.
Kirsten Chapman: Then Rook will join them for the Q&A.
Speaker Change: Will join them for the Q&A, It's my pleasure to answer introduce Ramsey and Mary. Please go ahead Randy.
Ramzi Amari: It's my pleasure to introduce Ramzi and Mary. Please go ahead, Ramzi. Thank you, Kirsten, and thank you all for joining. I'm delighted to speak with you today as I'm deeply passionate about UEI and our mission to create smarter living. As you're aware, during the past few years, as we recognize the challenges facing our home entertainment business, we've been investing in new markets and channels to generate new revenue growth. I'm excited to report that our efforts focused on connected home market are delivering results. Starting with our Q1 2025 financial results, we will begin to provide sales detail for both the Connected Home and the Home Entertainment Channel.
Randy: Thank you Kirsten and thank you all for joining us I'm delighted to speak with you today as I am deeply passionate about <unk> and.
Speaker Change: Our mission to create smarter living.
Speaker Change: As you are aware during the past few years as we recognize the challenges facing our home entertainment business, we've been investing in new markets and channels to generate new revenue growth.
Speaker Change: I'm excited to report our efforts focused on connected home market are delivering results.
With our Q1 2025 financial results, we will begin to provide sales detail for both the connected home and the home entertainment channels.
Ramzi Amari: Bryan will discuss that and our financials in detail later on the call.
Speaker Change: Brian will discuss that in our financials in detail later on the goal.
Ramzi Amari: Briefly, here are the highlights of our quarterly performance. In Q1 2025, net sales were within our expectations, driven by a 31% growth in our connected home channel. Our Q1 2025 bottom line improved 14 cents compared to Q1 2024. These results reflect the impact of new customers and product revenue growth, as well as growth in our existing customer relationships and the stickiness of our long lead sales.
Speaker Change: Briefly here are the highlights of our quarterly performance in Q1 2025, net sales were within our expectations driven by a 31% growth in our connected home channel.
Speaker Change: Our Q1 'twenty to 'twenty five bottom line improved 14 cents compared to Q1 2024.
Speaker Change: These results reflect the impact of new customers and product revenue growth as well as growth in our existing customer relationships and the stickiness of our long lead sales.
Ramzi Amari: Now, I'd like to review a few channel highlights. During Q1, sales grew across our entire connected home portfolio. Sales orders increased for our climate control solutions from major HVAC OEMs and for our Zigbee thermostat and sensor products in security. Additionally, we started shipping new and innovative outdoor sensor for SOMFI, which measures both luminosity and temperature. Overall, we expect to see continued demand for our connected home solutions throughout the remainder of the year.
Speaker Change: Now I'd like to review a few chattel highlights during Q1 sales grew across our entire connected home portfolio sales orders increased fraud climate.
Speaker Change: Mobile solutions for a major HVAC Oems and for our Zigbee service debt and sensor products and security. Additionally, we started shooting new and innovative outdoor sensor for <unk>, which measures both luminosity and temperature.
Speaker Change: Overall, we expect to see continued demand for our connected home solutions throughout the remainder of the year.
Ramzi Amari: Our home entertainment channel is performing to our expectations. During the quarter we delivered quick set updates to all our major smart television providers for their 2025 model TVs. We also began shipping a new sustainable green remote for a major operator in Europe.
Speaker Change: Our home Entertainment channel is performing to our expectations during the quarter, we delivered quickset updates to all of our major smart TV providers for their 2025 model Tvs.
Speaker Change: We also began shipping a new sustainable green remote for a major operator in Europe. This ultra low power voice remote significantly reduces battery waste during the life of the remote.
Bryan Hackworth: This ultra-low power voice remote significantly reduces battery waste during the life of the Now I'll turn it over to Bryan to provide an update on our finances.
Speaker Change: Now I'll turn it over to Brian to provide an update on our financials. Thank.
Bryan Hackworth: Thank you, Ramsey. First I'd like to discuss the sales detail we'll begin reporting this quarter. Over the past few years, we have focused most of our R&D span on control products designed to operate outside the traditional home entertainment stack, such as climate control, home automation, and security. While sales growth from this new area of focus has taken longer than expected, we've won several projects. with major customers over the past few years that are now translating to meaningful revenue. As a matter of fact, for the first quarter of 2025, the connected home sales comprised 34% of our total sales.
Brian: Thank you Ramzi first like to discuss the sales detail will began reporting this quarter.
Speaker Change: Over the past few years, we have focused most of our R&D spend on control products designed to operate outside the traditional home entertainment stack, such as climate control home automation and security.
Speaker Change: While sales growth from this new area of focus is taking longer than expected. We've won several projects with major customers over the past few years that are now translate into meaningful revenue.
Speaker Change: As a matter of fact for the first quarter of 2025, the connected home sales comprised 34% of our total sales.
Bryan Hackworth: and growth in these new categories more than offset the decline stemming from core cutting. We expect the same for the second quarter, which we'll discuss later when providing guidance.
Speaker Change: And growth in these new categories more than offset the decline stemming from cord cutting.
Speaker Change: We expect the same for the second quarter, which we'll discuss later when providing guidance.
Bryan Hackworth: For this reason, we believe we have reached a point where it makes sense to break out sales between the two channels, connected home and home entertainment. The Connected Home Channel represents climate control, smart home, and security product sales sold primarily to HVAC, security, home automation, and home appliance customers. The Home Entertainment Channel represents entertainment-related product sales sold primarily to video service providers, consumer OEMs, and retailers. It also includes sales associated with intellectual property, life, and death. and our cloud-based software solution. The first quarter 2025 net sales are 92.3 million at the midpoint of our guidance.
Speaker Change: For this reason we believe we have reached a point, where it makes sense to break out sales between the two channels connected home and home entertainment.
Speaker Change: The connected home channel represents climate control Smart home and security product sales, so primarily to HVAC security home automation and home appliance customers.
Speaker Change: The home Entertainment Channel represents entertainment related product sales, so primarily to video service providers consumer Oems and retailers. It also includes sales associated with the intellectual property licensing.
Speaker Change: And our cloud based software solutions.
Speaker Change: For the first quarter of 2025 net sales were $90 3 million at the midpoint of our guidance range compared to $91 9 million for the first quarter of 2024.
Bryan Hackworth: compared to $91.9 million for the first quarter of 2024. Connected Home grew by $7.6 million, or 31 percent, to $31.7 million for the quarter ending March 31, 2025. This reflects project wins that we've announced over the past couple of years. primarily from a few large customers in climate control and home automation, as well as SKU expansion with existing accounts. Home entertainment decreased by $7.1 million, or 11%, to $60.6 million for the quarter ending March 31, 2025. The sales decrease in the home entertainment channel is due primarily to lower demand for subscription broadcasting products. While we're seeing signs of stabilization with the majority of our customers in North America and EMEA.
Speaker Change: Connected home grew by $7 6 million or 31% to $31 7 million for the quarter ending March 31 2025.
Speaker Change: This reflects project wins that we've announced over the past couple of years, primarily from a few large customers and climate control and home automation as well as SKU expansion with existing accounts.
Speaker Change: Oh entertainment decreased by $7 1 million or 11% to $60 6 million for the quarter anymore 31 2025.
Speaker Change: The sales decrease in the home entertainment channels, due primarily to lower demand for subscription broadcasting products.
Speaker Change: While we're seeing signs of stabilization with the majority of our customers in North America and EMEA.
Bryan Hackworth: In Latin America, we're experiencing lower demand for our basic remote. Gross profit for the first quarter of 2025 was $26.1 million, or 28.3% of sales. Consistent with the prior's rate. with a strong U.S. dollar compared to the functional currencies in China and Vietnam. increase overhead absorption expected from higher levels of production. We expect improvement in our gross margin rate for the second quarter.
Speaker Change: In Latin America, we are experiencing lower demand for our basic remotes.
Speaker Change: Gross profit for the first quarter of 2025 was $26 1 million or 28, 3% of sales.
Speaker Change: Assistant with the prior year's rate.
Speaker Change: With a strong U S dollar compared to the functional currencies in China, and Vietnam and increased overhead absorption expected from higher levels of production, we expect improvement in our gross margin rate for the second quarter.
Bryan Hackworth: I'll now take a minute to discuss tariffs. At the current tariff rates, there will not be a material effect on our financial... because we've increased sales prices to offset the tariff costs for products destined for the U.S. market. However, the status of terrorists has been and may continue to be a fluid process. permanent changes to tariff rates were to be enacted. Resulting in a material adverse effect to our bottom line, we would respond, as we always have, to mitigate its effect. Over the past several years, we have proven to be adept at navigating regulatory changes affecting our business.
Speaker Change: I'll now take a minute to discuss tariffs.
Speaker Change: The current tariff rates, there will not be a material effect on our financials, because we've increased sales prices to offset the tariff costs for products destined for the U S market.
Speaker Change: However, the status of terrorists has been and may continue to be a fluid process.
Speaker Change: If permanent changes to tariff rates were to be enacted.
Speaker Change: Resulting in a material adverse effect to our bottom line, we would respond as we always have to mitigate its effect.
Speaker Change: For the past several years, we've proven to be adept at navigating regulatory changes affecting our business.
Bryan Hackworth: Operating expenses were $27.6 million compared to $29.4 million in the first quarter of 2024, reflecting actions taken to reduce expenses. SG&A expenses decreased to $20.5 million from $21.8 million in the prior year quarter. RMD expenses decreased to $7.1 million for the first quarter of 2025 compared to $7.6 million in the prior year quarter. Operating loss was $1.5 million compared to $3.4 million in the first quarter of 2024. Net loss for the first quarter of 2025 is $1.5 million, or $0.12 per share, compared to $3.4 million, or $0.26 per share, in the first quarter of 2024.
Speaker Change: Operating expenses were $27 6 million compared to $29 4 million in the first quarter of 2024, reflecting actions taken to reduce expenses.
Speaker Change: SG&A expenses decreased to $20 5 million from $21 8 million in the prior year quarter.
Speaker Change: R&D expenses decreased to $7 1 million for the first quarter of 2025 compared to $7 6 million in the prior year quarter.
Speaker Change: Operating loss was $1 5 million compared to $3 4 million in the first quarter of 2024.
Speaker Change: Net loss for the first quarter of 2025 was $1 5 million or <unk> 12 per share compared to $3 4 million or <unk> 26 per share in the first quarter of 2024.
Bryan Hackworth: Next, I'll review our cash flow and balance. We have made significant progress over the past several quarters by improving our cost structure and working The first quarter of 2025, typically a seasonal low, we generated $9 million of cash flow from operations. pay down debt resulting in a net debt position of only $3.6 million at March 31, 2025. compared to $10.2 million at year end. Our Strength and Balance Sheet and Cautiously Optimistic Outlook, which I will discuss in a minute. affords us the opportunity to purchase shares at an attractive price. We currently have approximately 778,000 shares remaining on our share repurchase authorization.
Speaker Change: Next I'll review, our cash flow and balance sheet.
Speaker Change: We have made significant progress over the past several quarters by improving our cost structure and working capital in.
Speaker Change: In the first quarter of 2025, typically a seasonal low we generated $9 million of cash flow from operations and paid down debt, resulting in a net debt position of only $3 6 million at March 31 2025.
Speaker Change: Compared to $10 2 million at year end.
Speaker Change: Our strengthened balance sheet, and cautiously optimistic outlook, which I'll discuss in a minute affords us the opportunity to purchase shares at an attractive price.
Speaker Change: Currently have approximately 778000 shares remaining on our share repurchase authorization.
Bryan Hackworth: and we will begin to buy back shares in the open market.
Speaker Change: And we will begin to buy back shares in the open market.
Bryan Hackworth: Now turning to our guidance. For the second quarter of 2025, we expect sales to range from 91 to 101 million. compared to $90.5 million in the second quarter of 2024. representing a growth between 1 and 12%. We expect connected home sales to range from $32 to $36 million. compared to $23.3 million in the second quarter of 2024, representing growth between 37 and 55 percent. In home entertainment, we expect sales to range from $59 million to $65 million, compared to $67.2 million in the second quarter of 2024. representing a 3 to 12 percent decline. We expect EPS to range from $0.05 to $0.15 per deluged share.
Speaker Change: Now turning to our guidance for the second quarter of 2025, we expect sales to range from 91 to 101 million <unk>.
Speaker Change: Compared to $90 5 million in the second quarter of 2024.
Representing the growth between 1% and 12%.
Speaker Change: We expect connected home sales to range from $32 million to $36 million compared to $23 3 million in the second quarter of 2024, representing growth between 37% and 55%.
Speaker Change: In home Entertainment, we expect sales to range from $59 million to $65 million compared to $67 2 million in the second quarter of 2024 reps.
Speaker Change: Representing a $3 12 per cent decline.
Speaker Change: We expect EPS to range from five to 15 cents per diluted share.
Bryan Hackworth: compared to a loss per share of $0.09 in the second quarter of 2024.
Speaker Change: Compared to a loss per share of nine cents in the second quarter of 2024.
Bryan Hackworth: While we're excited about the revenue growth in ConnectedHome and optimistic about its potential, I think it's important to note that sales in this new channel are not as predictable as sales in home entertainment. Thermostats, for example, are tied to large ticket items such as HVAC. and therefore can be more vulnerable to macro-level trends. For this reason, I encourage investors to review Growth and Connected Home across multiple quarters. rather than on a quarterly basis.
Speaker Change: While we're excited about the revenue growth in connected home and optimistic about its potential I think it's important to note that sales in this new channel are not as predictable as sales in home entertainment.
Speaker Change: Thermostats for example are tied to large ticket items, such as HVAC units, and therefore can be more vulnerable to macro level trends.
Speaker Change: For this reason I encourage investors to review growth in connected home across multiple quarters.
Speaker Change: Rather than on a quarterly basis.
Bryan Hackworth: Before I open the call for questions, I'll reiterate, over the past few years, we have successfully taken action. to improve UEI's financial condition. These cost measures have enabled us to continue to maintain our technology leadership position in home entertainment. while allowing us to invest in new products and technology. to achieve our long-term goal of becoming a leader in connected homes.
Speaker Change: Before I open the call for questions I'll reiterate over the past few years, we have successfully taken action to improve <unk> financial condition.
Speaker Change: These cost measures have enabled us to continue to maintain our technology leadership position in home entertainment.
Speaker Change: While allowing us to invest in new products and technologies.
Speaker Change: To achieve our long term goal of becoming a leader in connected home.
Kelly: operator, please open the call for questions. Certainly. The floor is now open for questions. If you have any questions or comments, please press star 1 on your phone at this time. We ask that while posing your question, you please pick up your handset if listening on a speakerphone to provide optimum sound quality. Please hold just one moment while we pull for questions.
Speaker Change: Operator, please open the call for questions.
Speaker Change: Certainly the floor is now opened for questions. If you have any questions or comments. Please press star one on your phone at this time, we ask that while posing your question you. Please pick up your handset that's listening on a speaker phone to provide the optimum sound quality. Please hold just one moment, while we poll for questions.
Steven Frankel: Your first question is coming from Steven Frankel with Rosenblatt Securities. Please pose your question. Your line is live. Good afternoon, and Bryan, thanks for the breakout. I think that really is helpful in understanding the dynamics underneath the numbers.
Speaker Change: Your first question is coming from Steven Frankel with Rosenblatt Securities. Please pose your question your line is live.
Steven Frankel: Good afternoon, and Brian Thanks for the breakout I think that really is helpful in understanding.
Speaker Change: The.
Speaker Change: Dynamics underneath the numbers so can we start with.
Bryan Hackworth: So can we start with Customer Concentration. And then I'll have another question for you. Sure. We had two 10% customers in the quarter. Daikin was at 17.7%. and Comcast was at 11. Okay, and then if you look at the. the HVAC space where you've announced a lot of wins over the last two years. kind of how many of those top 10 customers have yet to ship their first unit with you? What's the backlog look like in terms of not dollars but in terms of number of partners that haven't gotten going yet? Yeah, we've shipped the majority of them.
Speaker Change: Our customer concentration and then I'll have another question for you.
Speaker Change: Sure, we had 210% customers in the quarter Daikon was at 17, 7%.
Speaker Change: And Comcast was at 11, 2%.
Speaker Change: Okay, and then if you look at the.
Speaker Change: The HVAC space, where you've announced a lot of wins over the last two years.
Speaker Change: Kind of how many of those top 10 customers have yet to ship their first unit with you. What's the backlog look like in terms of not dollars, but in terms of number.
Speaker Change: Partners that havent gotten going yet yeah, we shipped the majority of them I think we're up to at the top 10, I think we've we've won an eight or eight of the accounts.
Bryan Hackworth: I think we're up to at the top 10. I think we've we've won I think eight eight of the accounts. And as you know, over the last couple of years, the The launches have been a little bit delayed, so it's taken longer than we initially expected, however... We're starting to launch, you're seeing it now in the Q1 results, it's showing meaningful revenue. So the good news is we're at that point where we are shipping, and I think of those eight, I think we probably shipped probably at least five more. The key now is to continue to win more SKUs within those accounts, just like we did with Daikin, or you go back years ago with Cable, where you win an account, you win a SKU.
Speaker Change: And as you know over the last couple of years the.
Speaker Change: The launches have been a little bit delayed so it's taken longer than we initially expected. However.
You know, we're starting to launch you're seeing it now in the Q1 results, it's showing meaningful revenue. So the good news is we're in the we're at that point, where we are shipping and I think of those eight I think we probably shipped probably least five of them are you know the key now is to continue to you know to win more skus with within those accounts just like we did with you know with diet in ore.
Speaker Change: You go back years ago with cable where you you went in account you win a SKU you prove yourself and then you've got additional skus in and that's how you end up building a meaningful revenue.
Bryan Hackworth: Prove yourself, and then you get additional SKUs, and that's how you end up.
Bryan Hackworth: Okay, and then when you look at your home control business What percent of that? is shipped to outside of the U.S. Oh, I think the U.S. The U.S. is the majority. I don't have an exact figure on that, but the U.S. is the majority of the home control breakdown.
Speaker Change: Okay and then when you look at your home control business.
Speaker Change: What percent of that.
Speaker Change: He is ship to outside of the U S.
Speaker Change: Oh I think the U S is.
Speaker Change: Outside is probably going to be.
Speaker Change: The U S as the majority of it I.
Speaker Change: I don't have an exact figure on that but the majority of the U S. As the majority of.
Speaker Change: Of the home control breakdown.
Speaker Change: I think it's about 30 or 40%.
Speaker Change: Of the total.
Bryan Hackworth: that I'll get you out of here. Okay, so even with the large percentage to Daikin, you're still majority US and home control. Yeah, Daikin's in Connected. Oh, yeah, I'm sorry. I was talking about Connected Home. I'm sorry, that's what I read. The majority of HVAC is outside. Okay, so that's, that's one thing in your favor when it comes to tariffs. And then in terms of your major subscription broadcast partners, if these tariff rates are higher than that, that kind of the 10% number, you feel like they'll be willing to share the pain with you? And that's why you're not concerned about that being a burden in the back half of the year?
Speaker Change: But I'll get you out okay. So even with the large percentage because I can see.
Speaker Change: Still the majority.
Speaker Change: Control, Yeah diamonds in the connected home.
Speaker Change: Oh.
Speaker Change: Oh, I'm, sorry, yeah, I'm, sorry, I missed that what I'm talking about connected home I'm, sorry, that's what I would say I thought you said home entertainment.
Speaker Change: Yeah.
Speaker Change: A majority of HVAC is outside the U S.
Speaker Change: Okay. So that's that's the one thing in your favor when it comes to tariffs and then in terms of.
Speaker Change: Your major subscription broadcast partners.
Speaker Change: If these tariff rates are higher than that that's kind of a 10% number you feel like there'll be willing to share the pain with you and that's why you're not concerned about that being a burden in the back half of the year.
Bryan Hackworth: Yeah, well, I wouldn't say I'm not concerned. All I'm saying is, right now, I don't know how it's going to play out. You know, all I could do is go by what the current state is. And at 10%, across the board, we're able to handle this, you know, we're able to pass on you know, it will have an effect on the gross margin rate, not gross margin dollars, but gross margin rate because you're passing on on cost. Additional Revenue is basically zero calories. It will have a little bit of pressure on the rate. But in terms of the rest of the year, we've just got to see how it plays out.
Speaker Change: Well I wouldn't say I'm not concerned at all what I'm, saying is right now I don't know how it's going to play out you know all I can do is go by what the current state is and at 10% across the board we're able to handle. This you know we were able to pass on the cost to our customers I don't expect it to have a material effect on our financial statements.
Speaker Change: You know it will have an effect on the gross margin rate not gross margin dollars the gross margin rate.
Speaker Change: Is it on on costs.
Speaker Change: Additional revenues from basically zero calories. So it will have a little bit of pressure on the rate, but in terms of the rest of the year. We just got to see how it plays out I mean, the one thing that I think we've proven over time is that we are adept at reacting to some of these regulatory changes that affected our business. So I think we have we have a local.
Bryan Hackworth: I mean, the one thing that I think we've proven over time is that we're adept at reacting. regulatory changes. that affect our business. So I think we have locations throughout the world. If changes were to occur that are permanent in nature, that adversely affect our financial position We're going to have to react. So I wouldn't say I'm not concerned about it, I just have nothing to react to right now. It's a wait-and-see approach, you know, I think everybody's in the same boat. There's a lot of uncertainty in the world right now, but the one thing I'm confident about is that we've proven that we're very adept at reacting.
Speaker Change: <unk> throughout the world and if.
Speaker Change: If changes were to occur that are permanent in nature that adversely affect our financial position that we're gonna have to react and so I wouldn't say I'm not concerned about it I just I just have nothing to react to right now so it's a wait and see approach you know I think everybody's in the same boat, there's a lot of uncertainty.
Speaker Change: Certainly the world right now, but the one thing I'm confident about is that we've proven that we're very adept at reacting to these difficult challenges.
Steven Frankel: Okay, and then last question.
Speaker Change: Okay, and then last question, how about an update on the CEO succession plan and the search yeah.
Bryan Hackworth: How about an update on the CEO succession plan and the search? Yeah, you know, the board's been interviewing people, they have a search committee. So they've continued to interview. And we'll see how that goes. I'd say in the interim, though, I'm comfortable and confident with our team here. Ramsey's been here for- He's been with UEI for over 20 years. He's head of product development. I've been here, as you know, for over 20 years. Rick, our newly appointed Chief Operating Officer, he's been here three to four years but it's probably felt like tandem because he's had a lot of major activity.
Speaker Change: The board has been interviewing people. They are a search committee and so they've continued to interview and we'll see how that goes I would say and in the interim though I'm comfortable and confident with our with our team here who ran these dinner for with <unk> for over 20 years, He's head of product development I've been here as you know for over 20 years.
Speaker Change: Rick our newly appointed Chief operating officer, He's been here three years to four years, but it's probably felt like tender because he said he's had a lot of our major activity to to sift through so you know he ran the project with with shutting down G. TQ. He.
Bryan Hackworth: SIFT through, so he ran the project with shutting down GTQ. He managed and executed the spin-up of Vietnam as well as the downsizing of Mexico, so he's got a lot of experience under his belt, so I think with us three, I feel comfortable in this interim situation. And has the board hired an outside search firm or they're kind of networking and interviewing people?
Speaker Change: He managed and executed the spin up of Vietnam as well as the downsizing of Mexico. So he's got a lot of experience centers belt. So I think with Oh, three I feel comfortable in this interim situation.
Speaker Change: And has the board hired an outside search firm or their kind of networking and interviewing people.
Bryan Hackworth: Uh, no, they hired us.
Speaker Change: No they they hired a search firm.
Speaker Change: Okay, great. Thank you I'll jump back in the queue.
Steven Frankel: Great. Thank you.
Greg Burns: I'll jump back in the queue.
Speaker Change: Sure.
Greg Burns: Your next question is coming from Greg Burns with Sidotium Company. Please pose your question. Your line is live.
Speaker Change: Your next question is coming from Greg Burns with Sidoti and company. Please pose your question. Your line is live.
Bryan Hackworth: Afternoon. In terms of the gross margin for the quarter, I don't see, you know, you calling out any excess overhead adjustments. Are we just not, not calling those out anymore or have they gone away? Yeah, no, we stopped doing that about a year ago. I included it in last year's remarks, just for informational purposes, but it actually was not included in the financial profile. We're basically done. We, like I said, we, we finished the shutdown of GTQ a while ago, we spun up All right. And then when we look at the growth trajectory. and the Connected Home.
Greg Burns: Good afternoon.
Greg Burns: In terms of the gross margin for the quarter I don't see you know, you're calling out any excess overhead adjustments or were just not not.
Greg Burns: Calling those out anymore or are they they've gone away.
Greg Burns: Yeah, no we stopped doing that about a year ago.
Greg Burns: And last year's remarks, just for informational purposes, but it actually was not included in the financial the pro forma financials, so we'd be stopped doing that.
Greg Burns: We're basically done we like I said, we we finished a shutdown of juicy Q, a while ago, we spun up Vietnam, We downsize Mexico. So that's that's completed.
Greg Burns: Okay Alright.
Greg Burns: Alright.
Greg Burns: And then when we look at the the growth trajectory.
Greg Burns: In the connected home.
Bryan Hackworth: How should we think about that this year based on maybe what you have in the pipeline in terms of new products or projects? that you expect to come to market over the over the next maybe year or so, what kind of visibility do you have there and do you expect to see sequential? revenue growth throughout the year, you know, similar to what you're implying in your second quarter guidance. Yeah, I mean, all we do is provide guidance one quarter out, but I will say that you're looking at strong growth in Q1, projected strong growth in Q2.
Greg Burns: How should we be thinking about that this year based on maybe what you have in the pipeline in terms of.
Greg Burns: New products or projects.
Greg Burns: That you expect to come to market over the over.
Greg Burns: Over the next maybe year or so.
Greg Burns: What kind of visibility do you have there and do you expect to see sequential.
Greg Burns: Our revenue growth throughout the year similar to what you're implying in your your second quarter guidance.
Greg Burns: Yeah, I mean always use provide guidance one quarter out, but I will say that you're looking at Oh, we had strong growth in Q1 projected strong growth in Q2.
Bryan Hackworth: I feel good with where we're at in the fact that we're launching these products. The fact that it took longer was frustrating, but the fact that we're launching now... We still have a certain amount of wind. that we still need to launch, and we continue to qualify and quote on projects. So, I mean, this is a continuous process that... In order to grow, you have to continue to quote and win additional projects, and I think we're doing that. So I feel good with where we're at. The only question mark I really have for I mentioned in the prepared remarks.
Greg Burns: I feel good with where we're at and the fact that we're launching these products.
The the fact that it took longer was frustrating, but the fact that we're launching now and you're seeing it translate to growth is positive.
Greg Burns: We are we still have we still have certain amount of wins that we still need to launch and we continue to qualify and quote on projects. So I mean this is a continuous process that is just in order to grow you have to continue to quote and win additional projects and I think we're doing that so I feel good with where we're at.
Greg Burns: The only the only question Mark I really have from a from a macro level perspective is right now there's just a lot of uncertainty right now in the market and as I as I mentioned in the prepared remarks.
Bryan Hackworth: When you're dealing with large ticket items like HVAC, you're talking about 10, 12, 15,000 RPIs. You know, if there's a consumer sentiment were to go south. That's always a question mark. Right now, all we can do is control what we can control, and that is... launching and shipping the remainder of the Project WINS. new accounts as well as skew expansion within Excel.
Greg Burns: When you're dealing with large ticket items like HVAC and you were talking about 10, 12 15000 or purchases.
Greg Burns: If if there's a consumer sentiment where to go south and if you know.
Greg Burns: Terrorists words right now, it's a fluid process.
Greg Burns: I can't predict what's going to happen I think that's pretty common I think most people are saying the same thing.
Greg Burns: That's always a question mark but.
Greg Burns: Right now all we can do is control what we can control and that is you know launching and shipping the remainder of the project wins and continue to win new accounts as well as SKU expansion within.
Greg Burns: Within existing accounts, so I like where we're headed.
Bryan Hackworth: I like where we're headed. Okay, would you at all be able to quantify maybe the backlog or pipeline that you have, I think, in the past? Paul had mentioned, like, an $80 million... number in terms of revenue opportunity from the projects you've won. Is there any kind of Quantification you can give on where you stand now? Yeah, I don't have that exact number. I will say that of that $80 million that was referenced a couple of years ago, we haven't shipped all of it because of the delays. shipped in 24, some are shipped in 25, and we have some slated to ship in 26.
Speaker Change: Okay. When you would you be able to quantify maybe the backlog or pipeline that you have I think in the past.
Greg Burns: Paul had mentioned like an $80 million.
Greg Burns: Number in terms of.
Speaker Change: Revenue opportunity from the projects you've won is there any kind of.
Speaker Change: Quantification you'd give on where you stand now yeah I don't have that exact number I will say that of that $80 million that was referenced a couple of years ago. We haven't shipped all of it. We are you know because of the delays some shipped a little bit shift in 'twenty for summer shipping 25, and we have some slated to ship in 26, so from a full.
Bryan Hackworth: So from a full year effect, you're really not going to get that until 2027. shipped over a three-year period. But it's going right now where, you know, like I said.
Speaker Change: Year effect, you're really not going to get that until 2027 because of.
Speaker Change: It's been.
Shipped over three year period or at least launched over a three year period.
Speaker Change: But it's going right now where you know like I said.
Speaker Change: It's been a little frustrating how long it's taken but over the last couple of last couple of quarters. I think we've made a lot of progress and I expect to have continued continued positive progress.
Greg Burns: Thank you.
Speaker Change: Great. Thank you.
Kelly: There are no questions in queue at this time.
Speaker Change: There are no questions in queue at this time I would now like to turn the floor back over to Bryan Hackworth for closing remarks, well. Thank you for your continued support of Universal electronics and have a great day.
Bryan Hackworth: I would now like to turn the floor back over to Bryan Hackworth for closing remarks. Thank you for your continued support of Universal Electronics. have a great day. Thank you.
Speaker Change: Thank you. This does conclude today's conference call. You may disconnect. Your phone lines at this time and have a wonderful day. Thank you for your participation.
Kelly: This does conclude today's conference call. You may disconnect your phone lines at this time and have a wonderful day. Thank you for your participation.
Thank you.
Speaker Change: Yeah.