UEIC - Earnings call transcript Q3 2018 | Universal Electronics Inc.

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Operator

Good day, ladies and gentlemen. Welcome to the Universal Electronics Inc., Third Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] As a reminder, this conference call is being recorded. introduce for to call like would your today's host Ms. I from LHA Chapman Investor Kirsten Relation. begin. may you Ma'am

Kirsten Chapman

Thank thank financial Jarinda. a Universal By you, And you copy Electronics for joining now, release. third the of us the quarter have XXXX should results press call. you conference received all for

be webcast LHA this available the not, is will Also, at the XXX-XXX-XXXX www.uei.com/investor replay additional be This Relations call or Internet. of visit If for you will Investor section one-year at any one-year. might on least website it updated have the www.uei.com. that information broadcast the be over be material at live being retained Company's A provided call non-public please contact website where discussed at Investor for Relation during will relations.

also access I Harbor Safe webcast management. by a listening call to information statement, reading After that over to replay. You the short will the turn may

will more of our to management's costs obtain to and just projections technologies; new circumstances results date. obligation statements update events acceptable manage and and for at its Company and Commission. or ability ability attract temperature that or these Company's continued and including new control achieve forward-looking in of this anticipated needs timing new and wishes and its Company margins, technologies; products which company's to enter technologies; including incorporation our course and ability the surcharges from any you business and products its the and Company's efficiencies this Management Company, and customers product meet and to actual orders earnings ability including guided, The products and operating and improve existing such impact advanced to with control, achieves may providing the anticipate the revenue, wants, controllers trend today's management's levels continued through make with home are efforts cost other moving may continued the management the future of U.S. risks adjacent rollout laws, may advanced consumers deliver management; and call; two-way and due events the forward-looking our and adoption customers the control including QuickSet our materially Exchange to impact markets to of these including the that technologies customers undertakes no to include ability our or identify and containment Securities other the the financial of factors of continued the and changes to remote existing industry regulations effects uncertainties. to reflect of may by those acceptance Cloud described to products, voice and differ our future actual needs connected automation newer and the jurisdictions; regarding intuitive business in technologies successfully of During the lower new statements technologies as of and to statements differ The filings identified additional from may or operations that entertainment and due and by performance for customers' call, technologies, growth policies after including Company's manufacturing projections. materially other wants in and tariffs the statement home that Company's customers; conference from into products as projections the expected results the and the including cost management; by arise to technologies and QuickSet that those revise products of events caution security as

changes financial that investors processes financial the which manufacturing documents labor to a as how various Company from modified effective such from legal the reports materially to evaluate non-GAAP it thereafter. contained reflect on measures the trends, core financial goods as purposes was and and providing X, trends. and such refers along impact investors onset the could of factors, of Annual or revenue financial SEC, These the those that retrospective statements. performance with will equipment, the non-GAAP U.S. China. with management's The this budgeting, Form in call metrics metrics duplicative for provides a Company which Report efforts, with non-GAAP on making periodic of helps adapting to operational new management risk, and press basis files projections including management's forward-looking on in adopted on chain supply et for factory the operating XXXX, referenced. and the detail results filed cause documents in XX, the release year financial to business in costs In this for identified from them differ from evaluate XXXX ASC January adjusted December believes decisions contain Management and and ended and to with at further remarks, and you risks tariffs customers these movement cetera call adjusted incurred UEI's the uses the consistent measures measures be XXX performance identify because include related actual For and response contracts planning and to supplement non-GAAP mentioned GAAP by imported XX-K the costs time-to-time management

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

an then now Please Chief Arling Paul summarize turn my Chief to will Officer, closing call overview; and Bryan our Officer, will the remarks. to provide Executive Hackworth Paul go and Financial who ahead, Chairman call It's pleasure financials. the Arling. to will the Paul On today, Paul. deliver return

Paul Arling

thanks afternoon, for today. and Good joining us

over the quarter third XXXX. increasing delivered sales, X% expected, we $XXX.X net As million of in

their market more together again, and dominate products. improved the growth has, offer U.S. pervasive importantly, for Today, enablement, control control consumes technologies is and potential almost to frequently the and bodes with More entertainment per in the person control control product voice sensing in from through technology continual average proactive home audio-video and six becoming real. for expanding far well video Whether be automation, And Frankly, it advancement everything operations. hours emanates portfolio in of related control address entertainment to consumers broad the UEI we natural most UEI home. want experience form or and home once the used control a home of now, the of total as measures intuitive positioning is netting more AV This opportunity our the entertainment to is day. it as point. home is a by

two-way platforms. for systems, advanced one-touch and view advanced applications to intuitive home Our the enabling standard search entertainment voice navigation entertainment and set continue

our are to and expand in and through we technology leveraging automation our UTC, Now, security XFINITY as others. Toto, such Home presence accounts home Trane, Ring, Daikin,

quarter-over-quarter We and million in to in growth expect automation products them XXXX. our continue contribute sales home to see in approximately $XXX

You more at minute. and gaps voice a automation can that XXXX; on in products to expect that in CES home control bridge see

First, technology our let's discuss customers. and

platform complete home the empowers control control device with ecosystem. entire setup entertainment consumers of QuickSet discovery Our simple, and automated and

a QuickSet makes system Cloud even building home easier. entertainment Now unified

automated While world's using an actively providers view on the we board our largest subscription leading-edge and broadcast technology and adoption have to always takes control already enable one-touch technologies time, experience.

a them, live a entertainment generation provider powered Cloud. in major with Europe, of by went cable One next recently QuickSet platform

these specified automatic savings. had the powerful deployment, fully These manual data relationship This content with XX% Our remote setup binding, experience, setups is users real successful the to of week cost this just single beginning. button their analytics press first XX% Electronics households to able show relationship of with building directly Universal zero And This a and are is seconds, were that control. of is the technology. measured of in and in tune intervention.

from our a devices. a screen. brands been QuickSet growing cloud-enabled But features point AV in to platform set-top their proven largest key on the have single With control offering Additionally, boxes, game end-to-end more out-of-the-box worldwide. CES the our are IoT that enterprise a consumers new users with consoles, the International process cloud codename these up. experiences, all QuickSet and that be the at that great assistant and for last of growing default services management ecosystems. on-boarding platform, hardware the will year TV product in digital entertainment solution largest latest systems platform for and of audio display AI introduce that devices connected will to for many previewed leverages automation actively platform Building controlled TVs; This through enabled automation enabling across AI systems we are fragmented that be is home the building the Nevo XXXX, control our QuickSet our TV unify TVs, the gives list a voice-enabled importantly, home soon manufacturers home, fleet that Butler, and back-end integrates promises software we interoperability required ground we services

solution few and to positive. shown a very this key product worldwide to reaction have accounts is We their this

ongoing As this and our offering devices kits that control our voice-enabled bundled quality, relationships. first-to-market sensors, certified control subscriber like in Ecolink the launch great that I for the devices customers, devices include cements being with and customer of platform said, solid security coolest entertainment energy true voice safety attracts we highest It's features on and and generate will operators solutions. providing January with satisfaction management delivering including XXXX, value

over hundreds served and service of for proudly XX providers subscription operators have We years.

recently tariffs. agility provide Allow to provide We on this to operational to color innovation them and me endeavor will are the U.S. concerns topic. both instituted and to manage macroeconomic committed some like technological

strong We plus throughout adage As tenure illustrate XX-year stronger. we've our believe once companies get we this again. will tough-times during reported

derived operational effectively will approach. may We our be economic temporary of the using situation be believe this are our manage long-term We to from this macroeconomic benefits impact and agility concern. there

addressing that On sourcing shortages, UEI cetera. array over labor developed changes, a broad manufacturing allows labor labor supply us chain of has the for a such plus rates, rate the tariffs, options dual as et side, challenges years,

and those to process labor aware, less all those been into facility. have countries. less in that you probably for Frankly, shift to preparing certain the made have in are manufacturing favorable rates facility other we this labor shifting and China already As time skews of the rates are in well over have increasing we a because Mexico

to some levels, long-term the in labor customer's anticipate Sufficed result not provide potentially able in options we tariffs our that, a tariffs stronger challenges, shipping suit will and as over Bryan emerge I'll improved the in hubs manufacturing cost our will that we are targeted particularly expense, and from review Hackworth we the in lead times, With establishing also costs, facilities customers countries that include near-term we Americas, for our benefits, of ever. turn and can business challenge such solutions disruption near-term costs. that our our causing and for manage the the pursuing to are other while of this Other will these effectively changing be call CFO, we by with operations. our and effective manufacturing are delivery products to say world-leading to While financials. than inventory

Bryan Hackworth

Thank you, Paul.

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

Consumer home net in The adoption X% continued $XXX.X $XXX.X of our the for compared and subscription $XX.X compared third sales an for pricing of XXXX. XXXX. to were the home were supply million million in sales or Third The in in these quarter. revenue in capacitors Category resistors components. million higher energy million continued million and advanced the of resulting was Category security control quarter platforms year XX.X% Business primarily grew channel. Ring Daikin broadcasting growth XX.X% third XXXX. decrease both due quarter profit million Gross is $XXX.X global growth to specifically, and compared quarter $XX.X prior and increased to $XX.X quarter in to was million drivers shortage net compared third of automation; the of the main $XXX.X for the to to

specific I expect providing to gross margin not margin QX, gross the percentage for fourth in quarter. I'm improve our guidance Although

compared third of variety relating the these supply XXXX. a including quarter price $XX.X We compared of in to chain was and in continued was SG&A the $XX product reflecting was $XX.X million increases the million XXXX million. the are on investment $X.X million million. to million experience. to enhance offset in expense to R&D redesign $XX.X that expenses Operating compared Operating compared our to million changes the measures, working million of in were components. quarter user $XX.X third income $XX.X to technologies $X.X

a result compared relating in Net Our rate million government to per or was year or to $XX.X local a tax million effective as period. XX.X% per of receiving $X.XX prior-year to in refund a quarter from high-tech diluted the share from activities share $X.XX tax in $X.X decreased income prior XXXX. XX.X% diluted for the China

our million on at million reflecting at million with net the cash flow I'll our XXXX. bringing ended $XXX $X and Next, of $XX million quarter September cash of review to $XX.X line equivalents and to cash sheet XX, approximately balance June payments balance debt from credit XX, our $XXX XXXX approximately of quarter. compared We last million,

In addition, we $X.X for approximately XXX,XXX million quarter. third the shares repurchased in

in three as at Our cash sequentially month XXX inventory days improved less days All outstanding sales DSOs components of the from payables with strong biggest result conversion the collections impact days as as in end QX to improved September. XXX having cycle a outstanding days defined days of QX. approximately of plus of the

we improve of both and finished our quarter, in materials days the to continue we inventory balance goods. For fourth to lower raw expect as

in are With southern sale of on factory, we goal China our $XX we our next of as a our Capital completed XX our to by to the to expenditures implementation China factories, the returned reach the cash approximate the capital million. making, to production track progress more normalized Oracle Asia annual are were platform summer year. average, and of expenditures rate we On the in run conversion of expect have days second remaining quarter. our transition all of

initiatives. aligned to overhead as our our growth concerned, structure properly far it's we review if As with continue is to cost determine

will in leverage. range, As can we by commence the level areas. efficiencies continuing stated growing improvement we believe our implement maintaining to we in XX% quarter, of maintain and promising expense effectiveness certain some which the areas fourth substantial cost reductions quarter a have in revenue thus will X% as to while the we new creating while in XXXX invest growth in last operating same annually in will Overall, XXXX, and

our to million. $XXX the This $XXX guidance for quarter Now EPS to fourth $X.XX of back between million of the range fourth fourth $X.XX sales turning for the in range we call like from and expect fourth XXXX. quarter quarter to XXXX, compares the million to turn now I compared is Paul. XXXX. to to quarter would in expected $X.XX $XXX.X to to the

Paul Arling

exciting no Thanks perspective, doubt, are Bryan. times. in From is we technological very a there

home the We in entertainment world control. leader are intuitive system

and of home home automation in position Our rapidly products sales to related expect generate continues this million nearly to XXX automation grow we year.

the entertainment about products. digital Cloud, growth and to by momentum. our AI Nevo QuickSet us the mistake in leverage home pipeline new growth technology discovery in and Our ahead assistant cutting platform, control with followed build new edge Butler product continues new then on Nevo to and then our of starting continues XXXX Make no it. the The our automation intellectual property, runs is ago, many QuickSet years platform, history and innovation, with home build and platform upon our matches device competition of that in with platforms

very area of home. introduction of in a industry average by of exciting, future consumer's cacophony products a creating the the leaders this these variety is in protocols is While the

entertainment working products a together As into bring of done have existing is turn chaos The will safe to products, controlled our in home. create a to great and past, products new, we order the experience secure innovative a the a coming outcome cacophony intuitively continue that and this for will comfortable together symphony. we and and

success position have increase markets. complex, as We home our we in have gotten continued to the demonstrated past, our the our in leadership has and more core

is ever to enormous. still open we'd to this than the to like are as tuned. before is Stay call now more there questions. Operator, opportunity committed up much before for we work do, the us While

Operator

Our you. Sinderen from Riley first Thank [Operator from Instructions] FBR. question B. comes Jeff Van

Your open. line is

Richard Magnusen

Mexico, lines, Sinderen. the or and This taking And America of is the moving mentioned Latin then that maybe you or China Regard other other our what China? acquire expand Richard from supply Mexico parts Magnusen perhaps same of plans other along in have Van shifting to another you to regions, in actually outside for one of those question chain Jeff to Asia, you in region, areas facility for about regarding or do thank call. also

Paul Arling

well to volume is was point the Yes, tariff some implementation moving shipped we're taken rest of important space that mainly basically area. into everything Obviously, that actually affected probably it's to prior being had we because in action. The there. not the out the is the U.S., Mexico is But right, which tariffs. that already was the affected world unaffected of that by the additional

There space had shift had there depending taken expansion. year. some this But of be the expanded items. speed to may actually we we of some of the of August in space Monterrey for those facility prior available on already So in additional fact,

late In fact year. we did last it

Richard Magnusen

have forth increased you Okay. through components, through move XXXX? you you we perhaps And impact somehow XXXX? related about mention what impacts so and of tariff And you because what capacitors about as do then any that see the that, insight move like to into impacts being as

Paul Arling

because Yes. could I we've suppose the bigger – difficult sure could on to think applied somewhat, a that the different completely. countries, settled if with that have case, not I'm country. tensions would trade in there Mexico that. issue. be think all be argue know it's but even of will I say I a But the we Well, production time, in believes suppose tariffs we then that already you nothing anyone not the tariffed wouldn't moved to be to if tariffs place. out increase, I country, tariffs, it's in additional it put on would were if if shifted that will have affect tariffs anything,

again the States. being that pretty move, products the shipped we particularly United that with safe are for – So feel into

Richard Magnusen

Okay.

Paul Arling

again – getting already We our although, continue see would our think never the for for there. as to to effectively already tariff and shifted, So by affected we'll of it We've of actually, could that of issue cost we them. effect the this shifts new to some goal the happen already shifting. do think We've been would We be really customers whatever may we prepared is occur all we're the our on. guarantee facility there. worse, what any are and produce long-term for we time goes because of products don't temporal,

increase cost possible. have our not XX% So time when if pay that them have would with be levied, it at to a is least to goal

what that's helping our provider, reiterating So we're solutions keep them We're the doing. effectively We're than just creating we're customer. them, supplied. solution a problem rather to to cost

Richard Magnusen

And you collect many time over Okay. cases different considering you're ways the that users day data from question, hours information many considering then last devices. spending – lot sometime now? what that And you're a hours a some from monetizing maybe perhaps are one of in that using

Paul Arling

question. Yes, it's good a

and more Cloud getting more are solution. with particularly data, We QuickSet the

So there days, we it's some longer-term may do value but obviously, early that. believe be to

working are their of up with set control everyday major in their We devices. and the on players industry

be control home play right So growing obviously, building the home it's and your AV facto making successors about of QuickSet now, they're in plus we may de in very standard well system. a system, But as forward fashion, share control that. operation control – and a in your Cloud move its

Richard Magnusen

thank back very I’ll Okay, in much. you queue. the get

Paul Arling

Sure.

Operator

Frankel next Dougherty. from Our question from comes Steven

open. line Your is

Steven Frankel

in today QX? Monterrey flowing there that or and customers will of that is happen products facility the to clarification, just Paul, is a going out something

Paul Arling

is flowing already. out Monterrey. product happening it's There of No

Steven Frankel

have not what they China does situation? for it had we and would there to And tariff been in approach take have margins where been

Bryan Hackworth

Steve. Bryan, this Well, is

performing I in and take to It it's to facility little time get really, we different fortunately as I we in GTY. for have up ramp we Mexico bit that the to jurisdictions, think time. to and other answer is think transitioned no mean, than us the of already had I people when will place. a

Mexico fortunately train them We down we So people to be people We pretty able transferred from properly. to to able train hire that had our equipment to down different less thing do. were to sent – was one to jurisdictions and were quickly able and we promptly.

But think are well little are it as But think an well. facility, you you if existing now, I I bit everything run as right to pretty things So going want is well. takes a of going in then time.

Steven Frankel

there's But giving issue says not doing you're structural margin by this. up a that

loaded, properly be facility this margin business? this get you If will good

Bryan Hackworth

Yes.

Steven Frankel

kind level Paul, question. then And or a high Okay. of question philosophical a

for automation business? the home quarters margin for us business, last a significant which the not see higher automation margins of rapidly have home growing it. your talked should two than traditional yet seeing has What this about higher You've happen we're benefit to business, to

Paul Arling

Yes, good Steve. a question, it's

start just like think start one next-generation leader others the we the industry have is is AV for with them. match are good industry the you to happens the demand an shifted they what extent in a I the who toward is business, out, when in because the mix to to create to

shifted the innovator that's to on – people news, good size of and is that purchasing negative the direction. So traditionally the that power creates margins. of for mix better to and that an even leader in The customer only the their negotiating because it a position is to is industry those your more in will have a move that is stronger impetus

happen can every customers begin business, to is to you I in is, think medium-sized the has maybe and what smaller-sized true, margins improve. and growth comes penetrate this as and So

Steven Frankel

meet Okay. of original and us that you to an timetable? update there's roll-outs. your And new appears there list if long near-term anything a not gave last quarter, going especially Could customer stretching to you give and out us be

Paul Arling

were of beginning most have would Well There the that those I of that at you have a that were I the can't that I had finally. now delayed project are them XXXX. are going We as launching we we all projects again. that list, are now a supposed say generally many of but in If will would ramp the we're launched I to some so couple long that projects got to pushed. projects off expect. rattle off looked tell few

cancelled. these as said So before, are projects of we've none

cases, on All because them them the that the working future on working of these have industry advanced many are, customers that they to understand the platforms. in is of feverishly are

the seen to effort nothing late, many So of are any weeks significant. not And in off or schedule. schedule level them done month on getting we on of and if they're haven't they're a drop-off get them

be good have by projects recently. two. We had schedules view and a part So some not now months. that game we they delayed that of probably as again, been reach are But sometimes approval by month will or a couple delayed pretty delayed, of got that the the final just

Steven Frankel

then in what and Okay was the Comcast as quarter? a revenue percentage of

Paul Arling

They XX.X% last the were similar to quarter. were quarter. in third They at

Steven Frankel

customers? did And other have XX% you any or X%

Paul Arling

No, this it was just Comcast quarter.

Steven Frankel

specific you you're that to something Okay. a headcount bit are still – this studying to reallocating process, or of today? in And little talked have maybe that you way reduce that expenses Bryan, try about is at do you some where kind point plans

Bryan Hackworth

probably the into in first Hong and part Kong. implementation done thing of started latter in is We've definitely QX QX the we've where

basically cost into some headcount displacing jurisdiction. lower a the China, Mainland are We of

one. step that's So

go beginning. just have right China. moves That displacement started with from that's definitely begun need to into but whole that. is details Kong don't the has we So started and on to well of that, want more going and We But on it that I process headcount now. the into some that Hong but make Mainland,

Steven Frankel

of generating cycle a material down getting to Right. stage to this goal cash next of where XXXX that's And of year historical cash amount next Does bridge you the that mode your you're to we a year are set the is conversion or kind think about and of levels of get traditional the summer. by talked about generation. back back free cash ought to

Bryan Hackworth

gets CapEx Paul No, think to which XX a cash improved I – a we're XX made into significantly the turns help we will now last talked in and that track, which to from think the on though mean Yes. days cycle this levels, down inventory on range, that well we quarter, from I if get and significant inventory free some see because we've next improvement our cash for to right flow progress back about I there's still reducing headway will year Xx as even conversion just standpoint. days quarter room

last building ERP just to well make higher-end years, platforms. did we got in it new buying a just difficult out on QAD platform the full-blown ERP, know, couple to over we've you As these equipment with Oracle. factory spend more of aware, transitioning money new the And GTY to on for from ourselves, and

complete So quarter. endeavors fortunately, we are second these in were the that finished and those that, costly

is the there of are won't but effort Oracle put smaller they're couple and or those that Now be still jurisdictions much a so the other smaller. have cost; in, we nearly

we $XX give I our which a normal, down the So on last were to can think couple CapEx take, about we get million where before call or average, years. is of

Steven Frankel

the away feel the then you your pricing Paul, pressure all that you or customers you've people to Okay. expand power have need from to And need to approach you pricing? do your rethink today that were to margin really had, given all like the do pricing product technology appropriately as start your you

Paul Arling

done the probably have differentiated, There done higher is that. certainly product obviously to to lower controls, that. and of cetera better volume you'd small, they're lot And to customer. we the and place work there. But where need on Well, – we've cases in practices, perfect. be into differentiated took what structure those lower of medium take could – looked and the that extent I generally, think higher outside on We've generally product also a the be and analyze of We've medium, for put obviously that the margin approvals at purchase are they a each place or smaller the good as large differentiated done margins, groups. expect, will differentiated They we've higher cross-section been say we we customers, et see prices wouldn't we've always are job internally specific product be product, reviewed in are separated to for highly would order boundaries. a our

see or them that it's years happening. what's just bit little And come than think most lot a differentiated with higher it to fruition. in longer more probably be a technically over the that to next-generation three And I in are is, them help did from the would takes shift happening not think just because people product. the to for product continue, needs anticipated and implementations outside it to The project bringing the happened, it think it overnight, Steve, and that others, I is would last complex for these trend it think originally will I a are it's but I and we is agree. we of may doing ready I to ones doing the companies us who have than quicker are say little others fair because

at experience you look months and going the It's it more and not of for six it it's and home better seeing better, an going in more time. If due is in are take getting to is happening. upgrade but happening. and These was mean I we're products launches to entertainment, these. it happen

house these We're mentioned for demand all – call, voice We as that a And interest have that have a in for has I just work lot variety products in the of also protocols. a products. products voice-enabled seeing enabled The increased AV. for the of that. a to in unify platforms to

the see lift. as to we think will a towards we far place, advanced But really pricing these see in we we're now. put discipline based of place – a right should shift we a sitting have, pricing is need we on more as the see, we So platforms, good as we've in concerned, see

Steven Frankel

Okay. it. I appreciate

now. Thank I think that for you. does it

Operator

Our from question Instructions] & from [Operator Sidoti Company. Greg Burns next comes

Your line open. is

Gregory Burns

the COGS Good Chinese tariffs? are afternoon. What your percent of to subject currently

Bryan Hackworth

Well, U.S. based sales. obviously probably would about be, half. They the

Gregory Burns

you looking we Okay, said footprint. are tariffs. when be of complete like, that's and of at all and guess, that done, the for the percent I And readjustment to timeframe at still your to guess, manufacturing your what time I COGS subject will what

a out us China, you're I'm color are, you but move all that. the assuming give maybe So going can not little you but if to production of of

Paul Arling

now of about our as be Clearly, of no. would No, business out, affected. right half

to In absorb place is other the necessary, to have cost in not order It XX% to move which taking QX. QX. is effective in And we have increase. speak. we It'll was So that the that in words happening will them happen as provide solution customer.

in mid-year happen the again the disruption I will next the and far would to go customer it. down, longer-term can solution in these cost way products basically that zero goals do provider, you because products by that we the part of be in can cost preponderance the to what that. couple and of is of manufactured year, it cost quarters effectively, world world only be production this China shift we provide these effect say effectively. of In want should do place of as Through the not to to it we the the these the of still, other think make and then is But another not and a the effective products this. to be words could next as in our settle

Gregory Burns

Okay.

within the North out the America So of the end months. flowing China move all next XX is products into to goal

Paul Arling

Correct.

Gregory Burns

does do with your your footprint – will that All what guess China, excess that have you do what plans in like I are readjust? there once some you'll what capacity – Then, how right.

Bryan Hackworth

or to will at, looking few continually issue some question can to Yeah. going and then we We're will capacity and We're to of have two that. mean, excess not be to we is in evaluate – that a right there have have overcapacity factories reconsolidate we're but within the now, going we the next the China do months. have to work. I address evaluate we whether

Gregory Burns

Okay. of you I cost guess a of And exclusions revenue lot – sales. and then, have from some

In overhead on What's terms just the excess on you exclusions, that? bucket? sales a give detail bit more falls manufacturing what of can some into little of us put the of cost the

Bryan Hackworth

for mentioned, were as Mexico. gearing Sure, up Paul we

So had hire them what we to we down to before in do manufacture. workers you had is have to and you Mexico hire

we we we're GTC the had long took very and GTY, to transferred So we labor GTY adjustments. idle transition then from overhead China, after excess that and it wasn't Mexico. this reprieve. places equipment the then lot And thing short a unfortunately from at a We the so in hit. took next we very completed where a make having had of is had We to unabsorbed capacity the tariffs know

start fortunate we we But which to promptly note, Mexico a on unfortunately, capacity. couple excess of a facility positive are ago that issue years So and to have foresight had quickly. that move with the us in we same a the enabled

out in in and have to addressed the going figure I'm So quarter. that with probably that'll to with the current QX two deal to do exactly what factories, be but

Gregory Burns

understand additional it that that you're Is in of like service or kind there is what like? product on kind calling a solution just is, And of give that to in conceptually help Alexa. us competing product or us could terms of it what is I an Can you it the Butler. then like category any product, you guess color Okay. looks AI

Paul Arling

We don't in of that. is, center X to phone six want control AV the It's minutes want TV because call the prepared Sure, AV on we shifted to per five actually about admit average this remarks, even at video an Alexa. hours home talk way going because the is it, basically is a they're TV. is the the the while What product not is better does may and our heart product on U.S. hours or said live as of than consuming right, of video the people, people live not citizen it hours time of day. XX or that either this day, average system,

home is system. So AV the the heart typically any of

any this, day X that controlling emanates home. make the in I of spending in are and the and a you're Those from hours things more mental if that controls, all safer, have physical secure if XX from to environmental hate problem. problem, would probably AV. life, you your products comfortable, you automate heart activity because of your the all thermostat, say out most home that other think we control the this, be but is should home popular lighting system emanate about AV cute So I to more and them minutes the either this brilliant most but or a per nice they're add-ons

Butler So they will that. seconds. which and we in The on automate core what is QuickSet plug would have can consumer we completely our as is be obviously average start Cloud earlier Nevo and automatically data some that we products our configured said about market, within with, these can

be require can the basis manual have for control So, no it then, around at That it. the And it. you intervention devices home would all.

it addition, a In has multi-protocol or interoperability feature. a as

implemented as alongside. you already work Alexa the can AV control as voice alongside in So work home, even would if other your device, in words, enabling system. your other we products voice like enable had voice-enabled well Alexa, We Alexa, which home products

if a interoperate So essentially, it's device, product voice-enabled will any a it Even protocol voice-enabled a product home, your your and like different home, home device, everything alongside that would in any in protocol. with you had control any AV work frankly this.

Gregory Burns

it is Interconnected? a Cloud it pool… Okay, Can or

Paul Arling

said connected. I Cloud actually Yes, again, And would joking Alexa, it about Alexa. was when work alongside I an

have powered cacophony you use you If would cable that if in Alexa But your your supplied to so you by to chose work house. had devices, now if alongside were maybe voice-enabled it separate platform. a platform, voice-enabled it, you have operator,

tie – Nevo other not cross, would do that they're do work What systems discordant together. voice-enabled, voice-enabled, two have compatible. don't is is not Butler they not but they're cross is, them You the One together.

Gregory Burns

existing sell standalone this that or product idea and channels that going your through use so to to okay, a like you're this is is Okay, the – the... be this going

Paul Arling

begun it. standalone Well, are we and getting and near It's then remarks, yet, it'll sometime will next year. think traditional I customer potentially I would we be this it of as begin reaction could be lot be in presenting have real the not ready launch to to a positive our and it announced presented for and sold prepared a at base then obviously product, production but as CES,

Gregory Burns

potentially yesterday a today Are remote Comcast box box putting box? targeted out for at the set-top streamers, streamers. that news some out was there making or guess about I And you for Okay.

Paul Arling

guess I'm Comcast. a stronger I ever if not say relationship about I'm with I we're thing is at and good we're you on, projects have to is sure Well know very to say Comcast only relationship working this. talk liberty The but to that could allowed I we than don't with our

Gregory Burns

operators looking other And something you're seeing cable this? pick talks chord-cutters up those product like Okay. the customers, a is some to with in of that your with

Paul Arling

Yes, many actually looking them including over-the-top are Comcast. have done, into or their that of incorporating already many solution which at service

Gregory Burns

Okay, Thank great. you.

Paul Arling

End of Q&A Thank you.

Operator

I'm Paul for to to turn this showing at call remarks. time. would Arling questions no now closing like I the further back over

Paul Arling

Electronics. I'd Imperial the December. Security in your be note, at us thank we'll so Okay, to in joining next you month like for today of the and Universal continued conference investor support or Capital

this We second Needham at to international year at Annual CES, the lovely to a in of Growth course, CES Of and look the at in any you see York. January January, of day. the be you XXXX those Thank events. all you. seeing in of forward we'll New or course. Hope week Conference Have

Operator

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

day. You and wonderful have may a disconnect

Universal Electronics (UEIC) 12 Nov 182018 Q3 Earnings call transcript