UEIC - Earnings call transcript Q2 2018 | Universal Electronics Inc.

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Operator

Good day, ladies and gentlemen, and thank you for standing-by. Welcome to the Universal Electronics' Second Quarter 2018 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to introduce you host for today's presentation , Mr. Ron Parham. begin. please Sir,

Ronald Parham

copy you, us Thank Results thank all received you Call. release. All Universal operator, Electronics' joining a have should for now Financial the Second for press By right. you and of Quarter Conference XXXX

nonpublic contact not, available the visit and of at (XXX) website a where information addition, this at in www.uei.com. being for be material, discussed broadcast provided at additional at retained year. www.uei.com/investor-relations. replay might any If the please during XXX-XXXX that Relations be Investor updated call X you year on LHA And be have the it for is be will will X company's least section company's website or This call will

by a replay. information turn the You statement, management. I'll access listening short call harbor may After over to the that webcast safe to also

results ability benefits identify our growth obtain anticipated and the to management; ability successfully markets synergistic for management; home our intuitive conference the connected the as company's achieving customers our the actual risks update to of statements and technologies to new the more company financial providing may cautions customers During including the company, existing modified management, regarding just this and by rollout to may to factors of restrictions and achieves new and customers in its The its other due arise or products consumers events any products filings with U.S. earnings statements wants projections company's our control, forward-looking performance achieve new its ability of and of that the technologies; and materially to with from the our future existing projections Exchange enter growth anticipated to this and adjacent of by Management the industry technologies call, described develop and the product as temperature future actual import after new anticipate remote those and the include and company's continued security technologies; events these customers, technologies may including expected trend trade the materially and those the and forward-looking impact for or company's as by and and revise the meet statements products the results uncertainties. Securities these and obligation from by the of other identified acceptance no incorporation to new are call; will needs in management's technologies guided, into company the such business technologies, toward attract to or regulations, or management the technologies; course automation or the or revenue, QuickSet products, in including manage events products the timing controllers advanced as adoption advanced orders and continued continued due including and products and differ circumstances The and deliver from ability reflect of make may wants, changes the and continued of customers that date. needs Commission. statement the and other to differ which entertainment and control that company's business and X-way timely home export control today's undertakes margin projections. voice

uses and the For risks the report providing which materially those or SEC, budget adjusted to non-GAAP will for be These supplement investors because evaluate such statements. contained actual financial this non-GAAP referenced. as business year reports along adjusted from to documents of planning onset at it financial press results the that release how metrics management's In further purposes decisions, you investors and identify and including measures factors, management XX-K Form consistent from differ and this non-GAAP XX, thereafter. ended the metrics XXXX, with Management provides in for performance cause measures helps call contain the December time filed on to financial management's a for operational the and the to to GAAP time them operating financial periodic identified trends. and making financial projections trends mentioned forward-looking could on remarks, documents with the various with annual these risk, UEI's company believes call files and refers on performance detail and evaluate the and management core

operating description financial and facilitate comparisons of companies. today. the included issued these in versus press release reconciliation is GAAP trends business competitors measures and with and measures and other the adjusted of these believes results management full company's core Additionally, A non-GAAP

On will will summarize the who call an and today Arling, Chief the provide Financial will Executive Officer, are Officer, return then closing deliver Paul remarks. Chairman to Chief and overview; Bryan Hackworth, who Paul financials.

Go pleasure Arling. Paul. my the over call now ahead, to turn to So it's Paul

Paul Arling

protocols smart control we and of so the traditional so of Today, the we many one cartoons that cases homes evolving be ago. as and has is us our home connectivity wireless back control. afternoon, we our of pleased use am to years I the connected excited are that all speak joining Good a look We're home throughout at enabling we X-way the at the use in devices forward systems connected just UEI thanks in to interesting system-enabled with are us. today. advanced not and market arrived These from the in as day for you. will user-initiated for to types successes saw look and before conversion times say Jetsons emerging, middle inevitable using is it connected it many that the home are

shift our experiencing smarter, convenient control includes shared home efficient of As are as with day Similarly, such and utilizing we that more for voice cloud and a are the traditional control solutions to we products connected safety and AV homes. delivery front smart more have our X-way before, lighting remote you which security way traditional entertainment every use systems, HVAC, automation making systems ends.

As typically like not is standard definition, and with the analog before, path conversions many to smooth. definition technological high digital to

and results second Our this exemplify conversion. third projections quarter quarter

As quarter Adjusted down second sales net expected, down. non-GAAP $XXX.X sales million. were were

quarter However, our on to revenue representing the in from in our XX-plus trends between both million million, guidance our positive expectations automation is audio $XXX highest increasing sales year $XXX quarter expected home based the our products. come and core and third These are contribution in video products history.

creating for innovative and to a architecture devices. connected of well and of and a home infrared, system automation large as and as technology a competencies home automation AV frequency setup in and has smart products automated deliver cloud solution radio translated scalable to build discovery, database legacy control frequency of number enabled include: control success devices; and Our global control and devices millions control worldwide; that us core AV growing best-in-class IoT and design, development sensor manufacture radio low-power we scale to that have of and successfully IP

in each X AV than consumer position our use market as hours number more day. is today technologies X X an home the strong activity ever of important and case estimated every to address control and the Our represent in

to will clear As has intelligent our we continue advantage other successfully position control including leadership the expand names home our to control a competitive believe voice continue in to in markets, list their and biggest long smart and result, give execute of us that products on current entertainment alongside a With respective automation control. we the markets. regard working our AV in markets, to

growth a new We are significant and and control actively other that X and represent such developing also security services categories next product to the products opportunity safety and X climate as years. over

years, few of we development As an and the for sensing have you smart know, home. technologies continued in past control investment over our the

industrial for of our not may solutions million. year, at this of and management be globally. opportunities than strengthening and innovator Daikin environmental Fusion we conditioning AI product continue in the conditioning capitalizing air Earlier to business category. to this and strategic business invest you include expansion and and revenues grow to home technologies residential, products Daikin, of this heating UEI to and commercial use growth year, in business, the of widespread our provider technologies more However, the be a and worldwide of announced working $XXX expect air plan from These IoT XX, their with applications. on sizable business their leading revenues high-quality advanced, of technologies aware solutions automation magnitude This

pleased that a We help we key to to are on build provider as controllers vision. Daikin technology smart be deliver strategic next-generation their them

from sizable our have and sales to growth category We also year. announced which Home part last in XFINITY we Comcast business, seen security product safety in

window contacts security range and up indoor deliver closely home manufacturers Additionally, motion a Ring, the that and We sensors we security Ring by all-in-one have with cameras owned smart door of security Amazon. the system. wireless and company working Ring sensors. a that incorporate products been outdoor make and global

experts this growing growth hardware, our smart Our on home Market strong to rate major that see represents automation a as smart while in our and a bodes markets their we create is climate in predict them X experience. software Earlier to introducing the that new over in and lighting, unified and year, that compound initiative us. a home a simple customers grow security which activity, value providers plans. the such and next position services well control potential line bring indications into long-term embarked annual that years, and significant can technology over for product to and platform new grow product double-digit a consumers together for to great Early at to functionality the daily OEM home home services expected features suggest TV-watching time. top a industry expand control service smart AV creating brings opportunity

core on The our our be this introduced We platform continues benefit to interoperability. year We remotes and continued globally to RF in our product solutions introductions for home the as home to of that to continues this is entertainment in connectivity into as this provide traditional driver voice category. we entertainment remote existing development the key The of initiative integrate XXXX. shift also and initiative number QuickSet helps product control enable more a ecosystem will smart from half anticipate product back business control chip in in-home develops this drive capabilities strong our new smart share control into dual will advanced be enabled active from XXXX. voice projects and

remote almost systems anticipate voice XX delivered new remotes over we customers all example, the end platform In voice continues. launch for will EMEA, of this remote provider of TiVo's transition voice service that will and by control and TiVo to in a the operator an QX, the deployed. have As year,

Sky, Vodafone, TV Android new XandX. and Quickline remotes XXXX, For for the for back Liberty we operators, half shipping as and Orange begin expect three voice mid-tier well to Yes, of Global, remotes as

India Sky in in operators During will next TV remote the at introduced Pacific, that quarter, and we remote awarded markets new new Android new we select in New products BoE Korea in control Similarly, launch for namely were QuickSet Pay a Zealand. Asia early business year. Skylife in

This long-term and technology and on feel interface remote integrates a latest of customer, quarter, A our launched UEI's the changes look active Control. includes called including new and product a QuickSet line feature feature consumer-electronics control control the Adaptive the device. that control functionality source high-end universal depending latest our intuitive new Bose, that remote

the in review the which product that, CFO, major markets with QuickSet do addition in de the of the another and over a account, be for turn and well to to With respective accounts Sony will financials. facto Hackworth XXXX. Samsung such continuing Bryan I'll launch smart Our to as TV our for the solution of call market continues their

Bryan Hackworth

Thank you, Paul.

a will same XXXX in adjusted well the the non-GAAP reference for XXXX quarter as as reminder, results our period As second metrics.

million compared quarter to $XXX.X Business second the for million $XXX.X quarter XXXX. Second to net were $XXX.X in compared sales of the XXXX. category million quarter million $XXX.X were of net sales second

compared expected the to expenses we platform to second manage during $XX.X of Consumer levels, $XX.X on orders Operating profit was reduce second the their their XXXX. $XX.X customers million or to quarter preserve certain mentioned to million rebalance call, SG&A $XX.X million. to previous $XX.X user capital Category compared the and transitions. enhance XX%. to As the $X.XX inventory to second compared Gross XX.X% compared was quarter, $XX.X $X.X rate million compared in in second in million $XX.X to million in The diluted quarter year of Net compared prior compared the million million. to R&D XX% were XXXX, quarter. XXXX. million of tax to the compared our revenue share experience. XX.X% effective the that million share million $X.X in $X.XX per was per $XX.X period. diluted income was prior-year continued was million to $X.X or investment income technologies was quarter million reflecting in decreased Operating the expense $XX.X $X.X or

occurred not were in the of a of quarter, course our that that couple events normal During second there business. are

ERP jurisdictions First, the we in Oracle all platform went with live our within Asia.

completed the Southern sale China Secondly, we factory. our of

excluded result, write-down and gain the to We a China incurred of factory, arrive which as we of months of of as for the the the recorded having goods throughout million We closure on to go-live cost $XX second adjusted of as our we the at As efficiencies the first a our well of $X.X of a early prior China April assets excluded We excluded factory, quarter. week date which following and sold. million approximated result charges sale couple operations Oracle metrics. non-GAAP to the in as cease with $X.X million. related of our associated sale excluded intermittently manufacturing

Next ended million quarter with cash equivalents and XXXX. June, and I'll flow balance cash at XXXX. to December $XX.X the our XX, $XX.X of sheet at review cash We million XX, compared

used we of credit portion XXXX. mentioned, cash to our factory, and post-tax. $XX before XX, previously $XX the million tax million line We down of balance million a approximately at $XXX sale bringing As proceeds by $XX of to the yielded million June completed outstanding in approximately reduce our our which China

time by Primarily days more negotiating as We're our from vendors. a of our Ultimately, days Difficulty] of plus days approximately terms improved inventory by we QX XXX reduce level Our as cash the plus of to our to to cycle... days sequentially cash by reduce approximately XX as cycle plan efficient inventories days this at with outstanding to [Technical to next sales well payables XXX QX. conversion cycle reducing as end conversion working conversion better defined year. cash days in outstanding,

properly while the months, also initiatives. our continuing areas. expense in the can and our range, with maintain to on we will we to to reviewing we've reductions implement creating level by have a substantial effectiveness working certain been review, operating XX% XXXX we XXXX, and our growing placed over overhead will improvement promising invest maintaining areas, determine it's while the growth thus believe same revenue aligned as in new X% addition capital several base our In to growth our Overall, we in in leverage. annually being on focus past if efficiencies cost Based in

turning guidance the Now quarter for third to XXXX. our

net their to our quarter. as advanced in We sequentially improve well sales expect the as of year-over-year end quarter third new towards as one customers of subscription second launch the broadcasting platform

we're In energy addition, home growth security automation for customers with experiencing specifically space, Ring Daikin also control. and strong for home in

the to Paul. EPS third we now between to the million. result, call XXXX. This compared of $XXX in I to back to to the to would for compares sales XXXX. of quarter turn quarter a $X.XX million third range and like $X.XX As million third from in the expect $XXX.X quarter is range expected $XXX $X.XX to

Paul Arling

next We in home technology backbone entertainment is smart Bryan. the the our that the powers evolution. phase believe Thanks,

leader array springboard the us deliver control. and progressively that the in activated control are entertainment in a products Everyday both getting home in smarter. and to enables the of as home devices smart entertainment services, position AV voice Our broader automation home is

help with Today, home to our as the the new encompassing is Ring a lighting this and in manufacturing control and systems TVs, also systems lead beyond. many are and UEI as UEI and devices technology, working space leaders security, thermostats, fans positioned devices safety, customers the we at set-top make in partner enabling design and home. of in control lights, has and Our home existing connected other ideally boxes, dominant our and entertainment smarter. such UEI our Daikin. center of connect automation to is HVAC it

than in to still stages us it this it generate customer of is here, interesting year, we We entertainment over to systems area the entertainment and concept, transformation early beginning outlined more are this quarters. million $XXX not control to at will have revenue are and systems. as automation just to home earlier, and the the these exciting make home of is next in an automation for and announcements Home converge, smarter product and few I expect

to innovate, and We our create industry-leading continue operations. will more technology improve

will which over Stay contribute value shareholder like long to now we'd tuned. enhance to of open call term. up All for questions. the Operator, the

Operator

Our Instructions] the [Operator first B. Van line Riley Sinderen question comment from comes FBR. of or Jeff from

Jeff Van Sinderen

a of least part could in QX? you Maybe little launch a us sense color more us we anomaly the guidance get is this Do how to an Great linear level QX. at guess, lengthy guidance outlook up what or the - we it the linear? see a more to just you that customer terms on do and likely QX of give is your whether for is give think underpinning of return a this trying sense launch picking it's I their in business of of it advanced And if that's might you be? your the might at platform pathway? size think about should your of point? How to get revenues Wondering how think that for to ordering? more is back Just, think

Bryan Hackworth

Yes.

growth referenced, QX, I Ring that's broadcasting, the we the and because subscription home this First automation, customer driving from customer in only not all, we of thing Daikin. the mentioned have that's

They're customer, I the pretty top their of broadcasting unfortunately, good can't So customers. they're only the name, is in launch XX. but the not XX% not sized but name they're subscription customer driver. But a

launched. they the we're launch originally. delayed happy the are customers was So that of one They

it. Do existing all subscribers. distribute regions, across seeing So board play their that's subscribers they going to certain it to to went out. we're it now To of how off has to question right distribute now. the they or how it The

some So on QX in we definitely the promising. is ordered but way need time they that,

Jeff Van Sinderen

moment. Okay. Great. shift then, home if could maybe to for a And we automation

orders, part there customers of just, control of that's $XXX going the of home and of think the I talked million that the this segment business get rate think mentioned is better better and that, you programs? feasible do and you a I to You year. what segment give and their Daikin sensor trying a mentioned growth know scope several sense Can us I you customers about at that increasing sort and about sense guess, for forward? Ring, you of

Bryan Hackworth

that. encompass of home here variety a Obviously, applications. security. types Yes. control that safety all I'll There of answer different products is there's and

even that side, yourself control. customers, and do are IP So they a they HVAC able working the to - world-leader a products, own it on smarter, for to them main you've that are while. them, service a monitor on a well to other them and on them and in your system are that. they long-term connect we're others products, - with Daikin the And working of meaning is been phone numerous cell course, as plugging And in back drop home. we've on to control are is sensors make side, the got customer. have on HVAC, give as in connectivity their Daikin we

our I other and think security, control that simply home least buying do from HVAC, customers, have safety, products. we'll to of the They year, are at AV customers not it's end control products buy home us in control note by this type probably important XX at all. that lighting top X

been range think And a home to us, a be is XX% - the growing this us, we area. for of to over couple the growing and smart significant prepared years. to that So this as will comments, for business is business the projected a continue. stated This in a next in XX% high-growth growth I is be has is

live a to hours X two that because their of TV AV So from is almost it actually of person quarters the now DVR that average Recent main just from day, business in supplements Nielsen consuming and of video X close This the which coming the perform ago. now American activity people - says the the U.S, their saw is sources. is from is from up average consuming I homes. our part data it

the but for of as their safety that in natural other connect homes progression home systems they the more this course, smarter. number their become of I So HVAC secure. a make is homes the their control X course, people in and think environment, activity today, it's lighting, and of for security, to

there for great and a them think natural of progression use customers, case existing think to we home. X a our So have areas, of we're do we the the new them some into again, extend because in and it, number to new platform is some these we

Jeff Van Sinderen

It's good to hear.

business really the of So is sort of in your evolving terms mix?

Bryan Hackworth

Correct.

Jeff Van Sinderen

me China you remote how this wondering Let are - in factory? margin from think And off. jump Where should you gross Just new me ask and then just on we at just I'll there? generation the about where this one we the stand point? production

Bryan Hackworth

good from From manufacturing price some headwinds, us some our now, don't anybody, news made we've though. perspective. it's I Yes. lot companies and unfortunately, a is think as We got I a increases - key I of point we're of of - that's that, progress headwind well. the - to number affecting a mentioned And it's facing percentage are X we the view, margin mean, gross right think components. for

X number the components side. trying It's the for offset us. to just the really that's pressure So headwind on pricing

Operator

Steve comes line Our question Company. next the & Frankel from comment Dougherty from or of

Steve Frankel

automation still [Technical $XXX Difficulty] year this million? last comp you was could the us business detail tell opportunity, with around The home that what

Paul Arling

Yes. exact I it was $XXX Steve, but don't than have the million. number, less

Steve Frankel

commentary where on were production? And to are on getting in least other On these launch that one customers delayed, us in the kind then, those of performance you poor that caused give QX, got major at Okay. could customers - those some in QX. we've

Paul Arling

Yes.

in yet mean products terms that haven't of You launched? been

Steve Frankel

Right.

Paul Arling

at on track all point. They're Yes. this

done, delays, a four. two and to sometimes any see delay or there in past will the a reason the don't way warn I just that is project we month then, but of great any projects get or So of X/XX

in last the pretty UI, that possible we their levels so only but quarter of are possible, is the which out, we finalizing it software, experiencing for guidance is So the give. the through working the customers product technical sophistication in can guidance it's the delays of gave confident always some some or in that we're

Steve Frankel

was what And in the Comcast Okay. quarter?

Bryan Hackworth

XX.X%.

Steve Frankel

gross understand commentary Okay. the prices and And about margin. on increasing, impartial component I that's

we kind margin that really expect flat it Or to ought mean to ramp the be just of gross ability does So to year? here? of now it's end your between and the impacting

Bryan Hackworth

Yes. on pretty We don't resistors, we're manufacturing on line, but side, going but with side. I good depend plus on strong it's ramping. margin the I doing gross to give and guidance certain the the mean are capacitors the on headwinds like think job the components improving a

drastically come So anything to down different. forecast I it's mix, really wouldn't

Steve Frankel

are your kinds Okay. these geographies? costs What contemplating of people And to this cost reductions, moving you things is where - flat? cost on lower keep that are you

Bryan Hackworth

feel to drive don't significant continue across top expense looking It's we're and leverage. on the I to and at at we're looking in will board, everything looking basically confident everything. get specifics freight many what next operating I we that, Yes, We're mean, the but do into can over years, maintaining at that. carriers. at you our going level, two margin mentioned. XXXX, We're looking grow too potentially want just be we the line, where we that it while to can

Steve Frankel

Or you can able to will institute these next year? things be Are And this early how start that quickly into will these effect year? changes? you go in

Paul Arling

next or and start this X.X year. of course we'll We'll year over on the act quarter this

Steve Frankel

not And we questions. Okay. just want to because answer boring don't accounting Bryan

might I so that at Is going quarter, non-GAAP On short-term XXX phenomenon? GAAP calculation non-GAAP to? QX don't the that guided sales that we the we higher this this than this a are you saw Or remember last even is this being to what every be quarter. something in quarter, magnitude see sales material to

Bryan Hackworth

Actually, the similar. magnitude was

than - effect amount. QX, was, reversed sales equal and less GAAP happened forma, from the little in then in the QX, there's pro it but year-to-date, So the nearly were what

sales million think million was, it I say - $X actually QX. it in it I'll in $X was and QX So in was

So pretty was close. it

compare the So everything I'm don't year-to-date, apples revenue even against goods done in allow there's certain effect. new to the very in is, last people go that yet. finished that are, rules problem get so warehouse, certain are apples we've rules shipped the sitting on them to years XXX that recognize little your because you The confused new trying they you where haven't to

apples, order year in I'm to so - a this I'm pro to it apples we compare So trying to that comparison. forming have good

Steve Frankel

to is, But that to clear, you be Okay. guided for - guidance the sales? non-GAAP

Bryan Hackworth

Correct. Yes, correct.

Operator

question from from Burns next or Company. comes Our the line & Sidoti of comment Greg

Greg Burns

there besides Comcast? any other XX% Was customers

Bryan Hackworth

Comcast. just was It No.

Greg Burns

quarter, And contemplate to levels? patterns your guide their Like, rates? adjusted are third that kind for normal order the does rebounding of Comcast kind more to they normalized back of

Bryan Hackworth

of that lost to But I with or any any don't them nature. speak customer the haven't Yes, - say, and any don't particular we we guidance. I can for share Comcast, example,

they're less now. right think ordering I So

fortunately been good end security continue base, customers mentioned a grow mentioned to subscription strong high with customer as they doing I advanced customer launched - Ring Daikin has and launched with these a and in pretty broadcasting new remote. for business, very also got a and and for previously, home us, automation the one us platform channel years and Daikin those, on as well. is well. it's So that's our just have helping strong platform, and we We've with growth Paul of

a So to we one - any particular temporary a offset potentially customer. lot have of news shortfall in good

Greg Burns

cost Can you talk broadly some Chinese And business? I mentioned on affect Okay. guess about how more tariffs just might input imports you I good. know, That's your inflation.

Paul Arling

Sure. Yes.

incur that are imposed, we're From have those additional that We are been Vietnam will which the as our products closely costs to the to additional recently and out and September mitigate perspective, gradually we anticipate into to manufactured to months be October, monitoring operational tariffs highest been in react the obviously volume a difficult appropriately China highest complete, transition and and some as of expect to an in manufacturing priority late that the may and probably somewhere take tariffs shifting of into evaluating cost alternative. We we quickly means although, or plans implemented the tariff additional or of have situation facilities tariffs impact these it's or on The proposed that exploring manufacturing to do expect customers is process the products existing we we as developing U.S. fluid, and can. of our Brazil, have during in China. Mexico of that we tariffs, know. by as

over and next that we customers matter obviously, serve cost can, impact more know, effectively where on our out as transition long share the over if on the how this jurisdictions plays year, to this should over Then no business can its clear. topic few we production our necessary, becomes the we'll our or term. however, You will, next months

Greg Burns

Okay. going remotes, out have Comcast up you more situation? been Or as supplying - in everyone's to [indiscernible] you've - large a might where approach? it operators. past you're plans these of measured in more of, Is European to rollout? up like sense name Can terms you shares hands by like customers on that getting the be of out their I possible? they're And picked the called are rolling the do a in going sole-sourced you as a kind as are lot And of give keeping advance a they a all how guess, us the particularly, sense remotes, quick now have then it been rollout, a of where have historically,

Paul Arling

number Yes. There's things that. a on of

to try one. each I'll answer So

don't that - aggressiveness plans, of - out unfortunately, of with I in customer, terms they their program you In their yet. rollout obviously cases, have share can't they the some because by the

they'll to aggressive how So that but not out. many be as normal been as before be think. of I rolled in any times front Comcast, aggressive go there they though, of will probably these be was. cable, the the to out that announcing them be the platform may roll as out as We've some aggressively said aggressively want of history won't has ever course, SX us as Comcast in They rolled as

less that but Maybe, that edge Comcast would predict at far I expect will every a was, be to than they on as were think little rollout because how did it aggressively would to can get bad probably they operator to bit a So that? aggressive that Is as rollout rollout. of to aggressive Comcast idea. possible that mix be the

swap In sufficiently in lot it the they these because market for products, they involved other systems lot one these to of terms and even or they to vendor work with it's actually and the products, that work done elements out. tightly to for not that a often it's because work have share, again, not long, typically system, alongside the work are of just is than for the just of a it's the very at outset us, products are difficult not simple of things for the complex, vendor which integrate have more somebody, are getting vendor more sufficiently customer the these means qualified

to is, benefit a the So it is, of that more negative customer. integration good that The higher and it leads of takes with time is typically that it news of effort. share customer that - the

In Does the of answer of fact, elements sole-source-type relationship. question? often, your that a all

Greg Burns

Yes.

Paul Arling

Okay.

Greg Burns

you two any Difficulty] talking in over operators a years be think do pretty next or to that of might of two these one on you're of Europe, or the [Technical one customer rollout? large them about XX% Some

Paul Arling

Well, are probably largest of in of quite in yes, the Comcast. not that size may the largest would be types of customer but names status, obviously, XX% world. the we've the products these [indiscernible] the They purchaser operators the Comcast be listed Europe.

- they high, but know it's So significant that names industry. one. I are don't than And obviously, reach the if would these more in they are

of because that, that are boxes is not reason is is the that we again, concept going we if AV are the names leading look obviously markets list it's at in commonplace. And believe just companies we implementing IP-connected control serve. set-top something that this, the to paired you So predicting become this the with of smart that

more each So continue. commonplace to and that this is think more we quarter each and and becoming is year, going trend

this this there these the proof a It's are but entertainment We're be that day quicker. is to entertainment in where has indirectly connected help to the the future, products. types I to yet. there And that user of As the the be of This that the in X-way, IP not-too-distant control will self-configuring, said services types and every will are more going remarks, voice prepared get devices of commonplace. it, have the these get international to to home early going forward. innings in has is want still become we've phenomenon they just that mentioned not an market happening. transitioning names home

Operator

comment Prince or RBC. from line the question of next Our George comes from

George Prince

the it I right, Ring to turn Amazon's, on becoming the all the awareness the world more the entire having possible more being of if home? of and TV the possible device by now? the Amazon. aware Google's, that knowledge codes this RF of Is there sense it Is Apple's TV are of for So common Paul, was center mentioned the the you and and of that of is device bought importance the remote remember the Ring,

Paul Arling

aware doubt. No it. of Yes, they're

controlling we've when or are Again, I who years around if that it. the statistics calling all this phone your is, of is when for some of and some of average which go this now, applications America focused in maybe people's aware mean today, of to in your live goal, consumer a people where day. been I X products, they think, and - for lives other the They HVAC, consumer home, back in come industry most entertainment X ordering of the are better time-shifted video watching the are blinds. that This your services, business often system. on nearly front center a typically they not what your these what day. applications, is best launch are controlling the home. the around are fan, already entertainment place your hours people home the talking hours average on the consuming other TV but AV, controlling about placed call system, They're lighting, that's is person in home place controlling

technologies use, much and to easier home that easier again, the entertainment systems AV those their will easily. technologies home the control bring to them allow Now systems about more the and making all are new but it also will

I the broadcasters, talk to, this, subscription So all companies traditional consumer that clearly. we companies our these electronics the think customers, see

of already see companies things, things, some that of have these them these introduced Some already other and well. I'm are developing it sure as

the typically happening. is where This they're consumer they're in And addressing I front at, is which of is So clear. think it that system. AV

George Prince

update you an what remind Can world? margin share the me give your think or now in in the me is U.S. and of you

Paul Arling

entertainment? home the Of

George Prince

the TVs. Just for controls remote

Paul Arling

isn't than I Overall, home of it depends. entirety yet. that were would the greater it TVs say that you share that or on to probably entertainment, for well, subset, XX%. platforms, though for market be XX% advance Yes, far the if would take

George Prince

U.S? or Is that globally

Paul Arling

Globally.

George Prince

And in now, the it's like right? XX% U.S,

Paul Arling

Yes. That's right.

George Prince

right. All

for we So when here, comparable the find research price. do can't we our anything

companies the are the or darn able value most these good up a $X, $X the to at, for it $XX, is that So pretty money, this aware house? control whole pricing whatever you becoming to the be for end

Paul Arling

over the best our by have. in Sure. would see attest good customer provide the to list well far, We led should years. part us what's customers share of the given true. They a we I we've world, our value. very think, solution the it that, is as That the gotten to opinion It's and in market

rest. and that So our is never obviously, - solution yes, I think we

this. isn't entire still an further experience. but committed completely controller solution ultimately AV for else your better would to from will home good - It for to control just ever who separate desire system, to us having even enough. not was anyone Our your and improve We're continue get into

Operator

Instructions] have Dougherty Company. from question a Steve Frankel We Mr. & [Operator from follow-up

Steve Frankel

of from to cable level, gross - margin a the Paul, relative profile high typical controllers automation your what's margin controller? home

Paul Arling

typically about talk, margin gross don't Yes. by Steve, category. We product

the margins areas control. estimates that. precise bit little higher a than on I those of you can't I So generally, in really typically, number give are, a AV would industry say that,

Steve Frankel

a and it's So certainly, your than higher customer it's assumption you also logical that will don't have that business, concentration the issues, correct? AV help,

Paul Arling

time - And higher on, goes traditional that goes control. as a on, yes, AV is category margin see. than this we'll as it's our think something is time Yes. But I today,

Operator

I'm back the showing additional Paul Arling the any to over closing queue. to turn call questions remarks. like no in I'd for Mr.

Paul Arling

Conference. of support like Media B. your us We'll month I'd we'll at note, and Okay. Conference Bank's today or Jaffray so, joining Annual Thank and continued conferences. Electronics. the Piper Institutional Tech conference, Technology be Dougherty's Select Riley's Conference, you Investor and Universal at the in for to several Deutsche be next Consumer

forward there. seeing of later. see will you place to we'll you and call now take for our participating All between and conference these Thanks look next we and today

Operator

gentlemen, the thank today's and for participating Ladies conference. This program. you in concludes

Everyone, have day. disconnect. You now wonderful may a

Universal Electronics (UEIC) 2 Aug 182018 Q2 Earnings call transcript