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DATE

Thursday, Aug. 6, 2026 at 4:30 p.m. ET

CALL PARTICIPANTS

• Interim Chief Executive Officer and Chief Operating Officer - Richard Carnifax
• Chief Financial Officer - Wade Michael Jenke
• General Counsel - Ryan Hochgesang

TAKEAWAYS

• Net Sales -- $73.2 million, representing a 25% decline from $97.7 million due to lower demand in subscription broadcast and connected home markets.
• Non-GAAP Diluted EPS -- $0.34, including a $0.34 benefit from a nonrecurring $5.1 million recovery of previously paid tariffs.
• Connected Home Net Sales -- $25.1 million, decreasing from $34.1 million primarily due to reduced demand from large climate control and home automation customers.
• Home Entertainment Net Sales -- $48.1 million, down from $63.6 million reflecting lower demand for subscription broadcast products.
• Adjusted Non-GAAP Gross Margin -- 35.4%, including 690 basis points from the sale of tariff claims and 160 basis points from tariff refund accrual mix effects.
• Component Cost Impact -- 240 basis points, representing the adverse margin impact from higher component and memory costs.
• Non-GAAP Operating Expenses -- $20.1 million, a 24% reduction year over year driven by personnel savings from organizational rightsizing and lower discretionary spending.
• Research and Development Expenses -- $4.3 million, down from $7 million last year as the company optimized headcount and focused on projects with defined customer returns.
• Selling, General, and Administrative Expenses -- $16.8 million, decreasing from $21.2 million due to lower volume-driven costs and reduced travel and professional fees.
• Adjusted Non-GAAP Operating Income -- $5.8 million, improving to 7.9% of net sales from 2.9% in the prior year quarter.
• GAAP Net Income -- $1.6 million, or $0.12 per diluted share, compared to a net loss of $2.9 million in the second quarter of 2025.
• Cash and Cash Equivalents -- $32.4 million at June 30, 2026, compared to $32.3 million at the end of fiscal 2025.
• Operating Cash Flow -- $5.5 million for the first six months of 2026, supported by an $8.1 million reduction in inventories.
• Inventory -- $70 million, down from $70.8 million at the end of 2025 despite buying ahead on long-lead-time materials.
• Net Cash -- $11.6 million, representing the company's cash position after accounting for outstanding debt at the end of the quarter.
• Available Borrowing Resources -- $48.7 million, increasing from $42.5 million at the end of 2025 with no borrowings outstanding on the U.S. credit line.
• Customer Concentration (Daikin) -- 21% of total revenue, representing the company's largest customer in the second quarter.
• Customer Concentration (Comcast) -- 11.4% of total revenue, being the company's second-largest customer during the period.
• Customer Concentration (Sony) -- 8% of total revenue, the third-largest contributor to quarterly net sales.
• Special Cash Dividend -- $0.24 per share, declared for payment on Oct. 15, 2026 to stockholders of record as of Aug. 24, 2026.
• Fiscal Year 2026 Non-GAAP EPS Guidance -- $0.45 to $0.65, reaffirmed based on durable cost actions and operational execution.
• Shareholders' Equity -- $143 million at June 30, 2026, as reported in the second quarter financial results.

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RISKS

• Carnifax stated, "component cost and availability remain the central operational risk into the second half," noting that lead times for memory and circuit boards exceed current planning horizons.
• Carnifax warned that input costs remain a "material drag" on the margin profile, noting that recovery of these costs account by account will take time.

SUMMARY

Management reported that **Universal Electronics Inc.** (UEIC -12.07%) returned to profitability in the second quarter despite top-line pressure from a 25% revenue decline. The company executed structural moves to align its cost base with lower demand, reducing non-GAAP operating expenses by 24% year over year. A leadership transition was announced with Wade Michael Jenke appointed as Chief Executive Officer, succeeding Rick Carnifax, who resigned to pursue a leadership role at a multibillion-dollar company. Additionally, the company declared a special dividend and filed a patent infringement lawsuit against Amazon to protect its intellectual property portfolio. Management reaffirmed its full-year earnings guidance, emphasizing that the outlook is grounded in internal execution and disciplined capital allocation.

• The company appointed Wade Michael Jenke as President and Chief Executive Officer, Raymond Ho as Chief Financial Officer, and Joseph Haughawout as Chief Operating Officer.
• Management filed a patent infringement lawsuit against Amazon in the U.S. District Court for the Central District of California, seeking injunctive relief and monetary damages.
• UEIC secured a sole-source remote control program with a major video customer, with production expected to begin in November.
• The company shipped the first mass production lot of a new smart thermostat platform to a major HVAC OEM and received requests for additional volume in the fourth quarter.
• Carnifax noted that supply chain constraints persist, stating, "lead times on memory, capacitors and printed circuit boards now exceed our planning horizon."
• Jenke confirmed the company has completed its planned tariff monetizations, stating, "the tariff monetization was for materially the whole lot."
• The company declared a one-time special cash dividend of $0.24 per share, reflecting management's confidence in the current financial position and liquidity.

INDUSTRY GLOSSARY

• Connected Home: Products and services that enable smart home functionalities, including climate management, security, and home automation.
• Home Entertainment: The business segment providing control solutions for televisions, audio systems, and subscription broadcast devices.
• OEM: Original Equipment Manufacturer; a company that produces components or products used by another company in its end products.
• HVAC: Heating, ventilation, and air conditioning systems.
• GAAP: Generally Accepted Accounting Principles; the standard framework of guidelines for financial accounting used in the United States.
• Non-GAAP: Financial measures that exclude certain one-time or non-cash expenses to help evaluate core operating performance.
• SKU: Stock Keeping Unit; a unique identifier for each distinct product and service that can be purchased.
• Renminbi: The official currency of China, also referred to as the yuan.

Full Conference Call Transcript

Operator: Good afternoon. My name is Angelina, and I will be your conference operator today. Now I would like to welcome everyone to Universal Electronics Second Quarter 26 Financial Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a Q&A session. To ask a question during the session, you would need to press 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press 11 again. I will now turn today's conference call over to our general counsel, Ryan Hochgesang. Please go ahead.

Ryan Hochgesang: Thank you, operator, and thank you all for joining us for the Universal Electronics Second Quarter 26 Financial Results Conference Call. By now, you should have received a copy of the press release. If you have not, please 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 information that might be discussed during this call, will be available on the company's website at www.uei.com. For a period of 1 year.

During this call, management may make forward looking statements regarding future events and the future financial performance of the company and cautions you that these statements are just projections and actual results or events may differ materially from those projections.

These statements include the company's goals, focus, strategies, and opportunities market trends, including in the connected home and the home entertainment markets, expectations with respect to customer orders and customer demand, including short term and long term demand, expectations with respect to supply chain actions and procurement, R&D, and product development activities, executive management transition action, restructuring plans and actions, including expected benefits and timing, financial projections and forecasts, including revenue, gross profit, operating profit, and net income, adjusted free cash flow, cash, cost reductions, and working capital, our ability to respond to business and regulatory changes, such as tariffs, and macroeconomic conditions. And expectations with respect to our ongoing litigation.

The company undertakes no obligation to revise or update these statements to events or circumstances that may arise after today's date unless required by law or regulation and refers you to the press release mentioned at the beginning of this call and the documents the company has filed with the SEC including its 2025 annual report on Form 10 k and the periodic and current reports filed to furnish them to the 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.

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 trend. In addition, management believes these measures facilitate comparisons with the core operating and financial results and business trends of competitors and other companies. A full description and reconciliation of these adjusted non GAAP measures versus GAAP are included in the company's press release issued today. Joining me today are interim CEO and Chief Operating Officer, Rick Carnifax and chief financial officer, Wade Michael Jenke.

Rick will provide an overview of our business, and Wade will deliver our financial results. it is my pleasure to introduce Rick Carnifax. Please go ahead, Rick.

Richard Carnifax: Thank you, Ryan, and thank you all for joining us. Before I turn to the quarter, I want to acknowledge the announcement in this afternoon's release. As disclosed, I will be stepping down as interim chief executive officer effective today, August 6. The board has appointed Wade Michael Jenke as chief executive officer I look forward to supporting him through an orderly transition. The details are in the release, and the Form 8-K filed this afternoon. This does not change the operating plan, the framework we are reaffirming today, or the actions underway across the business. And I will keep my remarks on the quarter. 2 quarters ago, we outlined 3 structural moves for 2026.

And last quarter, we reported the early proof points. Q2 is the quarter where those actions moved from early progress into the results themselves. Total revenue was 73.2 million down 25% year over year, including the impact of customer refund accruals associated with the tariff recovery and reflecting conditions we have described before. Component and memory cost inflation working through our customers' programs, legacy video and structural decline, European retail under pressure, a connected home inflection still delayed. Those conditions have not eased, and we have not been waiting for them to. What has changed is the company is now profitable through them, On less revenue than in Q1.

The clearest way to see that is the trajectory across the 2 In Q1, we reported an adjusted non GAAP loss of approximately $0.10 per share. In Q2, on slightly lower revenue, we earned approximately $0.04 per share $0.34 including a onetime recovery of previously paid tariffs. The $5.1 million recovery is nonrecurring, and is cash recovered rather than operating performance. Excluding it, the company still moved from a loss to a profit on lower revenue. And that came from the cost structure we have been rebuilding since the start of the year. Not from any recovery in demand. Let me provide a progress report on the 3 structural moves.

First, aligning our cost structure to our current revenue and margin expectations. In Q1, adjusted non GAAP operating expenses were down $5.3 million year over year. In Q2, they were down $6.2 million 24% as roles transitioned, programs wound down, and structural changes The labor reductions we described last quarter are now carried in the run rate, run rate rather than promised into it, and they came from decisions already executed. Rather than spending deferred into later periods. You can see the effect beyond the P and L as well. We ended the quarter with $11.6 million in net cash. Second, tightening portfolio focus.

R&D expense stepped down again this quarter as we continue to direct resources toward initiatives with the clearest path to accretive return. This is not about stepping away from what makes UEI valuable. We are not narrowing what this company is capable of We are narrowing what we choose to fund. To work that carries a defined customer and a defined return. Third, retaining key employees preserving customer continuity, keeping suppliers engaged. This is a move that is hardest to show in a line item, and the clearest evidence in Q2 came from what customers themselves decided.

With 1 of our largest video customers, we moved from primary supplier to sole source on a remote control program entering production in November. We also shipped the first mass production lot of a new smart thermostat platform for a major HVAC OEM. Which has since asked for additional volume in the fourth quarter. Even as the broader timing there continues to be shaped by component supply and integration work across the industry. Those are decisions about who a customer intends to rely on and they went in our favor at a time when the company was visibly restructuring. On profitability, Q2 continues to reflect the margin profile under pressure.

Adjusted non GAAP gross margin was 35.4% as reported, approximately 27% excluding the tariff recovery. Against 29.9% a year ago. Input costs remain a material drag, very little of that is specific to UEI. Component and commodity pressure has been broad across our industry, and it reaches us on a lag because we build to forecast against orders already placed. Where a specific input cost has moved and is attributable, we recover it on the evidence account by account. Broader inflation, we worked through sourcing and design. The p and l is carrying this cost today, Recovery will take time, but the cost work we have done is why we can still hold the framework we set in January.

On inventory, the balance moved up modestly from Q1, reflecting the higher volume we expect in the second half. Lead times on memory, capacitors and printed circuit boards now exceed our planning horizon. In that environment, the discipline is forward commitment against the longer forecast rather than buying reactively at a premium. We are buying ahead where material carries across programs. The work of the last 2 quarters is being measured across the second half, not in any single quarter's balance. Looking forward, our message is unchanged. We are reaffirming our full year framework of adjusted non GAAP diluted EPS of $0.45 to $0.65 against $0.31 in fiscal 25 on a basis that excludes the tariff recovery.

What I said in April was that our outlook will be grounded in execution rather than in demand rebound. Q2 is the evidence. A profit on lower revenue than the prior quarter a lower cost base, and a stronger balance sheet. The credit belongs to a team that absorbed a great deal of change and kept doing what customers count on us for. Delivering on the programs in production today and designing the ones that follow. With that, I will turn the call over to our CFO, Wade Michael Jenke to walk through the quarter in more detail and review our outlook.

Wade Michael Jenke: Thanks, Rick, and good afternoon, everyone. I will walk through our second quarter 26 financial performance with a focus on profitability, cost discipline, cash flow, and balance sheet strength, and then touch briefly on financial execution for the remainder of the year. Turning to our second quarter results. Net sales were $73.2 million compared to $97.7 million in the second quarter of 25 a decline of approximately 25%. The decline includes an accrual for tariff refunds customers, plus we continue to see top line pressure across both our end markets consistent with the difficult demand environment we have previously discussed. Connected Home net sales were 25.1 million dollars compared to $34.1 million in the prior year quarter.

The decline was primarily driven by reduced demand from large climate control and home automation customers Home entertainment net sales were 48.1 million compared to 63.6 million a year ago. Primarily reflecting lower demand for subscription broadcast products. Despite the lower revenue environment, gross margin improved meaningfully. GAAP gross margin and adjusted non GAAP gross margin were both 35.4% compared to 29.9% in the prior year quarter. The year over year margin improvement was primarily driven by the sale of the tariff claims, which contributed approximately 690 basis points and the tariff refund accrual mix effect of 160 basis points.

We also had improved management of inbound freight costs, which contributed approximately 90 basis points These benefits were partially offset by higher component costs, which reduced gross margin by approximately 240 basis points. And the weaker US dollar relative to the Chinese renminbi which had an adverse impact of approximately 150 basis points. Throughout the quarter, we remained highly focused on cost discipline and structural expense reduction, GAAP operating expenses decreased by $7.1 million year over year and adjusted non GAAP operating expenses declined by 6.2 million or 24%. Reflecting continued progress in aligning our cost structure with the current revenue level.

R&D expenses declined to 4.3 million from $7 million in the prior year quarter primarily reflecting reductions in payroll and related personnel expenses following headcount optimization SG&A expenses declined to 16.8 million from $21.2 million in the prior year quarter. The decrease reflected lower volume driven expenses people related savings from organizational rightsizing, and reductions in discretionary spending, including travel, and professional fees. During the first half of the year, we continued to benefit from the global reduction in force and related cost actions we initiated earlier in the year. These actions have led to a leaner, more agile cost structure focused on cost reduction, cash generation, and profit improvement.

GAAP operating income for the quarter was 4.8 million compared to GAAP operating income of $1 million in the prior year quarter. Adjusted non GAAP operating income was 5.8 million compared to $2.9 million in the prior year quarter. Adjusted non GAAP operating income as a percentage of net sales improved to 7.9% compared to 2.9% last year. GAAP net income was $1.6 million, or $0.12 per diluted share compared to a GAAP net loss of 2.9 million or 22¢ per diluted share. In the second quarter of 2025. Adjusted non GAAP net income was $4.6 million or $0.34 per diluted share.

Compared to adjusted non GAAP net income of 2.4 million or $0.18 per diluted share in the prior year quarter. Now turning to our cash flow and balance sheet. Cash and cash equivalents at the end of the quarter were 32.4 million compared to 32.3 million at the year end 2025. For the first 6 months of 2026, operating cash flow was 5.5 million positive Cash flow benefited from working capital actions, including $8.1 million reduction in inventories during the first half of the year.

Inventory ended the quarter at $70 million down from $70.8 million at year end 2025 Accounts receivable and contract assets increased versus year end, primarily reflecting the timing of sales collection activity, and the recognition of the tariff refund receivable. We also strengthened liquidity during the quarter. Available borrowing resources were 48.7 million at 06/30/2026 compared to 42.5 million 12/31/2025. At quarter end, there were no borrowings outstanding under The US credit line. Now turning to our outlook. For fiscal year 26, we remain focused on areas within our control. Cost, discipline, profitability, working capital management, and cash flow.

We expect our actions to further align our cost structure with market realities, improve profitability versus last year, and strengthen our financial flexibility. For the full-year 2026, we are reaffirming our prior guidance and Continue to expect adjusted non GAAP diluted earnings per share to range from $0.45 to $0.65 compared to $0.31 per share in fiscal 25 With Q2 now behind us, we have a greater visibility into the year ahead, and our guidance remains unchanged. As we execute against our 2026 business plan. Thank you all, and I will hand it back to Rick.

Richard Carnifax: Thanks, Wade. Overall, the restructuring and refocusing actions we initiated are now delivering measurable results in the areas we control. Very clear about what has not yet turned and component cost and availability remain the central operational risk into the second half. We are reaffirming our full year framework based on the durable actions we have taken rather than on an assumption about conditions. On a personal note, it has been a privilege to lead this company through this period, and my thanks to our employees, our customers, and suppliers and the board. The plan we are executing was developed with the board and is directed to what matters to shareholders. Improving profitability, generating cash, and rebuilding financial flexibility.

That is how we build a stronger UEI. With that, operator, please open the call for questions.

Operator: Thank you. At this time, we will conduct the Q&A session. As a reminder, to ask a question, you will need to press 11 on your telephone and wait for your name to be announced. To withdraw your question, please press 11 again. Our first question comes from the line of Steven Frankel from Rosenblatt Securities. Please go ahead.

Steven Frankel: Good afternoon. Thank you. First of all, Rick, I wish you good luck, and congratulations on your new position. Wade, a couple questions for you. You talked in the release about litigation against Amazon and give us some thoughts about the timeline here. And while we are at it, an update on the Roku litigation, which has been going on for multiple years.

Wade Michael Jenke: Yeah. Thank you, Frankel. I appreciate the question. So, obviously, with Amazon being very fresh, you know, that lawsuit was just filed today. The timing remains uncertain. But, I believe, filing this action was necessary to protect our IP rights, and, we are seeking appropriate remedies. So, yeah, the time was right to file, but I cannot really comment on the future timing. Terms of Roku, that case is ongoing. And some of those details are moving forward. There is a court date scheduled for 27. But beyond that, I cannot comment further.

Steven Frankel: Okay. And in terms of your guidance for the year, does that incorporate any further tariff refunds?

Wade Michael Jenke: Or have you gotten all the refunds that you are going to get? We have gotten all the refunds that we are going to get. The tariff monetization, was for materially the whole lot. So all of that is in the guidance.

Steven Frankel: Okay. And then just remind us what the customer concentration was in the quarter?

Wade Michael Jenke: Yeah. Sure. We had Daikin at 21%, and then we had Comcast at 11.4%. And then followed up third place with Sony at 8%. I will give you the top 3 there.

Steven Frankel: Okay. Greg. That is helpful. And then maybe the last question. Any more details around this thermostat win? Is this from an existing customer that is now expanding the number of SKUs with you? What can you tell us?

Wade Michael Jenke: Yeah. Absolutely. We are very excited. We began this journey a couple of years ago with the customer. They are a major HVAC in the market. And we have been developing the product And we just had a really big production shipment, and more to follow in the second half. So we will be able to share that in the coming quarters. All right. Thank you very much. Yeah. You are welcome.

Operator: This concludes the Q&A session. I would now like to turn it back to management for closing remarks.

Wade Michael Jenke: Thank you, everyone, for participating today in our earnings call for Q2 2026. A big thank you to Rick Carnifax for all his leadership and his great ability to create wonderful strategy here that has made a huge difference. We owe him a lot. We wish you the best in your new career. Thank you so much, and thank you, everyone.

Richard Carnifax: Thank you, Wade, and thanks everyone for your continued support of Universal Electronics.

Operator: Thank you for your participation today in today's conference. This does conclude the program. May now disconnect.