UEIC - Earnings call transcript Q3 2024 | Universal Electronics Inc.

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Operator

Good day, and thank you for standing by. Welcome to the Universal Electronics Third Quarter 2024 Financial Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the comments over to your first speaker today, Kristen Chapman at Alliance advisor of Investor Relations. Please go ahead.

Kirsten Chapman

Thank you, Julie, and thank you, all, for joining us for the Universal Electronics third quarter 2024 financial results conference call. have copy should release. the you now, received of a press By

for This broadcast available you Alliance webcast updated Relations non-public call, the website. contact not, replay this section discussed during information the is at the If company's X including please website material, visit of Advisors this have year. any Internet. over at live the XXX-XXX-XXXX on call, or uei.com of that be call A be being additional will Investor might

direct trends and manufacturing and During importance industry home of for the forward may to continue control indirect events innovative business events management; to connected company's impact be markets, due wins and trends. company financial growth differentiation and this referenced. financial call since has other and experience company's QuickSet company's ability management financial to such revise as monetization, the filed a delivery operating by the adjusted these with press on company's opportunities non-GAAP and its purposes it these affecting the continued including upside and capture freight looking and to by business and no in certain financial customer statements planning -- evaluates uses costs, in and facilities climate or metrics the worldwide, [ home activities reduction of and and the in products operating projections, to these then. In economic strategic because them expected to and business rising Management today's or the leading or management and onset unrest, core company release may reflect broadcasting achieve measures statements its include may report development the company's the disasters, of consistent at world including portfolio non-GAAP ] metrics control, performance business and risk or of leaders events wins; call, unique, annual reports mentioned provides all terrorist make ability crises, excellent remote of arise markets, flows this to the results and the as differ that financial including regarding attracting and UEI's market management's optimization political subscription company's businesses the after company's circumstances innovative strong and doing continued space materially future the in hostilities. The technology; you just HVAC of how remarks, company's stemming doing providing climate design results uncertainty obligation to design undertakes GAAP energy SEC, and the respect particularly spending, future refers consumers' you the and that will documents evaluate one financial to business date parts and company governmental of traditional the a capturing cautions or war, of manage to the potential ability as through the the results periodic to from its are the the continued may for brand that solutions, performance its those and believes the by cash from natural including confidence statements and continued public share with or actual the investors and including management; incentives statements the in XXXX XX-K company, health our projections. These providing with continue or the filed risk investors decisions platform the of budgeted Form expansion making update home automation operational through adjusted furnished to OEM and non-GAAP helps control actions, supplement performance IP and to measures the business technology and management's pardon, for offerings; business financial of cost-saving the to TIDE improved anticipated entertainment the initiatives licensing of to service,

will or value assets taxes adjusted margin, the its from loss, loss benefit provision, gross or combinations impact from benefit non-GAAP non-GAAP cost in GAAP other reconciliation and companies. in impact In results addition, comparisons core from of competitors to for with its on measures longer A to -- business global income Vietnam, related is the fair measures the trends costs the description manufacturing also adjusted Results today's facilitate income continued the footprint, profit, manufacturing Quarterly of included from gross of net section. these loss reconciliation pardon fixed from income will GAAP me, no versus -- or in business to acquired results. of XXXX. overhead no non-GAAP specifically before adjusted and the exclude and depreciation income financial resulting markup press operating figures. This measures the the excess company A in these operating management and results There website and and company quarterly or of believes full posted are XXXX is release. The in transition and and Mexico

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

Paul D. Arling

Thank today. you us for joining

deliver product reaching and profit our our net Gross within year-over-year, beginning were growth optimization QX basis initiatives XXXX with XXX sales to guidance. bottom to improve footprint QX points million, $XXX continued are solidly and EPS As profitability. $X.XX. increased line customer development and projected,

trends these to bottom year and QX growth expect with of the top prior We positive continue XXXX. line for period over

Europe review trend elements control the the optimism brands North successful due challenges, with many Home, build Connected and driving but OEM temporal foster to and the continuing and not year and incentives, as sales clearly earnings of the as been some the growth years beyond. potential over housing has of full includes our tempered robust our the also outlook. In of such Asia. government has and relationships this to The climate latent outlook starts next continue in to it into in industry as lower Our years. HVAC prior few demand I'll top we supporting for XXXX America,

sales expand our opportunities existing share, market XXXX With to XXXX, to and markets future Carrier, accelerate new XXXX, with growth. In our As first on expect we shipping are build QX, we existing making to pipeline began qualify which the product advanced continually build our continued thermostat. we product for our return, progress smart new to we the and garner share. meantime, opportunities accounts. In working

together We first consumers capabilities have been to that the ensure demand. working product their delivers collaboratively full our with Carrier

their support we respective their While business, excited new as replacement capabilities to kickoff, a add for with about predictive number development their and control to features these to already XXXX, next-generation and which we major we new actively adapters XXXX. product strong engaged in are continue are products had Carrier be authorized priorities product to into on of several dealers released several well during for Daikin, maintenance are to functionalities. previously about deliver released new that were time expanded launch, Many road will products, WiFi expand hold, their and line. and including discussions this as we would equally our our they enthusiastic lineup. With that expressed and maps align we like new In desire models of has XXXX that development climate products

continues platform garner to wins. TIDE Our design

user We global launch OEMs. utility products with are company. early combination X TIDE next scheduled year. DIAL to smart for development are in thermostat in major undergoing our the of top is currently testing with our BRIDGE, stages the XX TIDE a These final Also, European HVAC final of

We to be in XXXX. expect this solution launched

have wins Somfy, shade new RF with Gateway a major controllers we wireless brands. hub secured a Douglas Additionally, with X design controller for motorized and Hunter smart

and North American signed agreement national security [ line brand security for We recently smart thermostat ] introduced for a a a professional also Zigbee have sensors. of major our distribution

more consumer awareness we future grew change with in business forward. In are trends incentives, fluctuated, across and market offerings. for the television decades, for of business is traditional Europe. their government solutions of convenience benefits energy models this has to an affordable positioned drivers to know associated QX, be includes around government market demand in energy-efficient incentives. markets entrants and as America in benefit differentiate in general. savings, homeowners. going energy have as multiple we traction to North financing control striving unit increasing pumps have cautious we HVAC we in significant global the whom increasing The change options to with energy market This entertainment, to as providers and looking disrupt our the space In OEMs long-standing and opportunity creating relationships telecom are share driven customers to buying efficiency This increasing attractive with new a TV new costs market from number fueled by our with increasing rising Turning can multi-dwelling There advertising. In of fueled and heat smart the by opportunities. companies being are well make expanding prospects. Also, technology and many advancements are we are yet video the and growth equipment helping the technological U.S., growing thermostats home

can worldwide. In differentiation Essentially, bundled to our secure from will control it video entertainment such solution. remote energy battery-free device that replaceable customers will platform a new wins Our a energy the a win for and batteries. UEI's without households. a harvesting ambient to that experience QX, that infotainment controls design in to use uses with remote built-in advertising enables This supercapacitor for XXXX traditional product that offer and launch QuickSet major captures with we secured of continues in photovoltaic the U.S. our bring light video us design stores software display the product operate remote unique

quite solution Broadcasting at gateways. that we hardware our solutions X when or presented broadband device solutions in Conference, software is of this discovery we think the year. In proof-of-concept I impressed our major and showcased be on product next solution with and QuickSet early Amsterdam, many app it and IBC demonstrated International running you'll service At latest September, conferences. introduced exhibited

we Technology operators outcome North we multiple by Berlin, received latest trade in design wins. At positive gaming to well One TV the IFA desktop was event for category, and potential America Europe, new forward and launched look All mouse. our solution Our in and For a Consumer

well received, showing positive is and line growth new our sales of flat secure team Our category. years many for able partners after retail the OFA momentum retail product growth. business of from this new to orders our was was Overall, several

International the well Air in Electronics at Looking again in as Las AHR in Show, the or XXXX Consumer Refrigerating Vegas, CES, show be and ahead, Heating as we will exhibiting once January Orlando. or Conditioning,

of an cases showcase on-device our new insights detection, including whole will and private integrations. matter capabilities occupation improved and home We energy thermostats, new use utilization occupancy-based TIDE automations, around

also of capabilities We QuickSet personalization and our will generation home and new with entertainment connected and applications. showcase AI Nevo engagement next across

also platform provide sneak built will and these new and and bring customer We're customers' look multiple an about our ground our from the one to peek architecture seeing and home, scaling channels products support forward features thermostat a customers managed smart the key to offers We suite of what excited interconnected a next-generation to a distribution at services there. ability comprehensive smart optimized will on that across you for innovations applications. up

the please go to financials. Now ahead. Bryan,

Bryan M. Hackworth

I'll the compared review the to of of third third quarter results XXXX. XXXX for Paul. quarter you, Thank the

resulting year transition statements value footprint last costs our financial As non-GAAP of to These prior noted business reflected longer the overhead on from adjusted as and our no GAAP fixed These are XXXX assets factory effect the no as from adjustments changes the to fair excess markup year-to-date periods. have well our exclude depreciation financials acquired quarter, financials. cost in combinations. related manufacturing in corresponding

margin the quarter or basis $X.XX to aforementioned XX, million, with per costs XXX items share. of equivalent third XXXX, to gross amounted points For $X.X September associated ending the

when third the $X.X $X.XX mind these to equivalent million, XXX quarterly were of For points reviewing costs items gross margin share. in basis results. quarter our keep per Please of these XXXX, or for figures

the XXXX, the million $XXX.X to quarter compared XXXX. in third of were For quarter of $XXX.X sales guidance, within million, third net

has cord and Although from discretionary the spending we year-over-year headwinds cutting on comparisons effect still are goods, waning less ]. durable facing negative [ consumer on been

and to million sales matter XX.X% sales a in in Gross or As of expect grow we more on of years. The improvement plan over of more where the compared Monterrey, for XX.X% the X of is the our was quarter year-over-year, footprint final of XXXX. smaller, $XX.X we This the quarter plan fourth fact, XXXX to our facility. this but reflects the third optimization to near quarter past significant completion profit later. third transitioning are execution of phase successful a factory, our manufacturing Mexico involves efficient

of For per to XXXX in the $XX.X compared in XXXX, the were operating in quarter income $XX.X compared income was million $X.X in for increased $XXX,XXX million to a expenses of expenses $XXX,XXX XXXX. third XXXX. quarter. Operating the compared R&D compared XXXX of for year in SG&A prior quarter $XX.X $XX.X quarter the quarter quarter decreased of million $X.X XXXX. per quarter. year prior loss of net or third $X.X or third million $X.XX the expenses share third diluted of Net of third third share the was quarter million the million million from $X.XX to to million to $X.X to the

Next, I'll At and our compared equivalents $XX.X XX, flow at to million XXXX, and cash September review sheet. XXXX. cash XX, million balance December were $XX.X cash

reduced For to a a September includes September position which only in Year-to-date, million, approximately XXXX, million, net $X agency dispute former we net security at with ending credit was $XX.X relating million. XX, by of operating the on labor a over XXXX, activities remaining contract months in debt resulting by cash a of $X.X deposit XX, provided China. outstanding our million line $XX X

Now turning to guidance. our

we line are Several in positive beginning couple connected to to the projects of over years, improved our growth. see signs top won to addition home of past In terms specifically in the channel, structure, cost are starting ship.

While lead earnings in of taken rates the we routes first the measures guidance a the quarter sales in since for million that, has freight million marks risk entertainment elevated cargo sales the to to still patterns Utilizing faces to are quarterly alternative times. With million resulted XXXX. quarter growth to see share to Sea. gross in perspective, increased stabilize. From $XX from it's our the per freight This our ultimately, channel home compared headwinds, starting XXXX. year-over-year important range to forecast expect margin note Red costs we ordering related include fourth avoid $XXX and to $XX.X fourth projected growth XXXX, of and

per Paul. to compared XXXX. I would in to diluted earnings a the to share $X.XX quarter to to back expect loss We of per $X.XX call fourth range the from of $X.XX like turn share now

Paul D. Arling

We're in have Bryan. we for the of years. best been in Thanks, couple position a

beginning did Our persistence, quality, for as service to have ago done and innovation continue to foster focus strong to product relationships. tirelessly XX The XX is features work new technology-driven consistently developing we we revenue, attract yield to on new customers, we to decades. and months continue

users' with have optimization Our and are the is important certainly helping, improve the done enhance to experience and continue will always footprint business. recent but we great thing do create products in most customers' features efforts our that innovative

for improved profitability. sales believe reaching are paving in a future we As turning this growth the done We path a point. is we have past, and

when call, in this QX guidance, and stronger we provided the trend our I beyond. XXXX and to expect than QX opened be expect into we XXXX I continue said growth to XXXX, of Bryan As and

As always, for can up now we open the tuned. Operator, stay questions. call

Operator

[Operator Instructions] Frankel Steven comes Securities. line from Our question of the of first Rosenblatt

Steven Frankel

and designs, driven higher is just business a an the of a momentum you that's little growth. bit I'm volumes? bottoming a demand and of that, for in on of TV new end return feel unlocking how a combination by, congratulations this much Paul, some it, driving call trying about to pay to get talked let's versus frozen

Paul D. Arling

There thankful us. that a for, placed in have on, working trust Yes. Good which question, that their therein. we're projects are many customers is we're it's combination and

or for but Some delayed end, of a on them they've variety on of those reengaged reasons, them were by resources things other their projects.

the in X So some the and time it it time, that can have launched helps revenue number because we in complete of and stage. obviously month's project -- get months'

X.X in we've X maybe and won have ago development because but that, not course, longer, of our which development cases, also, some has joint some customer won path, path again taken still I a revenue but our little We won't years, even of testing in of it projects, tapering with years seeing of The lessening. wane. of And it while to to are that stage. we guess, eventually won't you we parts the wane, they make a that say are continue level entertainment there could is say, almost home

that got large So lot -- -- the until and so because of large once was would course, the it number a smaller. was shrinkage it

and can off out any shrinking efforts So from that continued at putting that the customers. we projects or can point have beginning the specific taper percentage pay volumes it can is this flat we're then that shrink growth because our overwhelm to

Steven Frankel

Okay. kind businesses and the this how of world? And smart then between home business from a new legacy split high kind this of does your entertainment level, device year

Bryan M. Hackworth

Yes. We that say starting we're don't break experience primarily to in that that home channel. will is out, connected but the I the growth

So business, going primarily the there still to as experiencing decline. but Paul starting -- it's all connected It's year-over-year, are home And entertainment still about, is decline. talked home. from it's we wane, some

the the really but only is you're offsetting a we're the connected entertainment not growth in you're home you're -- growing. greater still from So -- perspective channel, because home offsetting decline even

Paul D. Arling

that mention names detail. Unfortunately, new a companies with to customers able on to at next are but and we're industry of pretty some interesting I versions that concepts lot of it's do and state and are is entertainment here, we're still should it's And that new products home Steve, to is really probably more, give because both market, and one ones call. I will be new think that looking which that at did advantage that them. of lot are a a next clearly there interesting X looking existing working involved players I the very -- months. year. But I believe be on within of out X and one -- significantly, the important there yet still streaming We'll Yes. and interesting are models very their early And take the attractive there of there. be are of is there has sizable changed consumers, to a can't concept.

streaming ARPU-driven And people some the what lines and has will of in done. ARPU-driven impressed television happening now advertising, has the along company for what think be I with with it's been products. time

there well, cutting So a bring that's market. think still about watching time long transition as People offset much thriving as I it's ever products in home it. very on pretty active some have. about all could still as are now, that home And can as the I market. any for But been that is a entertainment such to say TV a we're they is known entertainment shrink cord working

Steven Frankel

improvement And don't volume to off obviously, should any expect Okay. a very or grow sales see on gross like even we mix levels? progress. require of QX here, material other are kind impressive lift things that might step-up margins From there margins, we help materially if in gross

Bryan M. Hackworth

Yes.

where really I third at with points with quarter. made the the XX rate. progress we've we're We're think and the happy I'm in over margin gross

for expect less to I than we XX.X%, I'm sorry, that it because little QX. QX, Now -- a be

some think is we points over with felt like I effect the -- And Red issues I'm temporary Sea, and temporarily. be where and to an the I improve. to adverse rates Now mentioned, the where to get-go, completed range, XX but the increased striving at. QX, as we're rates, we're we're X Sea when really the XX-point sustainable, we in last freight But think transition we're at. going happy the with that's overall, related is to issues, have causing it years, it's that sustainable. Again, -- it's with I Red I the From the always going

So I improve. would can't say we never to continue

footprint we to on the From becomes can. a rebalance it then we're -- to our could we perspective. that part efficiencies pressure higher jurisdictions as we you have a manufacturing and revenue a know, maximize perspective, think as northbound from always I between then mix mix, sell [ royalties margins. stream, put ] [ of And looking ]

right where be to. we we're in improve. always say would always never we're we improve. at XX-point can't looking expected now, We're So And range. again, to striving that to But we -- I

Steven Frankel

Okay. quarter? And the concentration last in question, the customer

Bryan M. Hackworth

and Customer concentration, Daikin was was and XX.X% at at Daikin Sony Sony. XX.X%.

Operator

line next Greg the comes Our from of question of Burns Sidoti.

Gregory Burns

not million guidance you any do At these expect costs? quarter? for the excess $X it And number? manufacturing is what contemplated what be recording point similar a of to Is the in fourth like

Bryan M. Hackworth

include only not made my let We no included excess the they're were, related statements. do record quarter. were in in the manufacturing. stopped they stated All include what to they're they you in read do so -- in know compare. excess financials. to not I overhead. longer numbers the but you financial number, the We remarks in we the -- just -- we what not our just included could manufacturing I anything that only EPS last And stated not

Gregory Burns

kind Well, Right. then they between and of to point at what the we ask adjusted So meant I when number? converge are guess the go do GAAP I away? going to

Bryan M. Hackworth

-- We say done. moved facility We're the a from physical we end Mexico. year, Monterrey, of at would -- basically the standpoint, this we're I near into completion. in smaller we're

-- X-year days we're the final final long in project. of So this very the

Gregory Burns

quarter, it a this million is $X number third in like Okay. And fourth quarter? to going be to something the then similar or

Bryan M. Hackworth

I through. charges that. through Well, the there'll be have charges through. working be coming exact because but still yet some there'll we're coming number don't some

Gregory Burns

of the kind when of in Okay. we at is timing stage, the growth back-end for or outlook you're of the next the ratable? is be be going when these coming have production of look 'XX? to the some in Do terms projects throughout Is maybe to going to of market when pipeline are of to getting stuff recognition you of kind on it -- more that year, kind stage some cadence of the it looking at revenue new loaded? And the visibility

Bryan M. Hackworth

now provide we're in sitting forward November. We're always careful, not though, do. Greg, guidance, because We to

throughout X year, projects X. QX, launch next have to and We X, scheduled

go have some and the some we And early, each 'XX some will ship of we through of we look customers. at ship as scheduled fact, already will them project obviously, for year, status with them late. In of

we're are So the a mentioned early coming, some later. in I remarks, go, on But some provide projects, of are project, these to few in revenue -- get prepared year, and that. there they'll reluctant guidance quite as each things layer as shipped that order many in them each they're as And first introduced, quarter. they introduce every period then typically the the

So provides every project another on comes new that layer of revenue.

So as time usually on entertainment, goes of home historic in exactly projects happened. on, these top growth that's new what our layer another. In one

As and multiple with derivatives. we just products won what call win we then kept projects, building. each customer project replacement or each we the layers would And

not, and those QX win the So projects, don't And to just larger. on on as we're the projects is which you layer them, it, those now. small But slightly build top projects. after layer revenue ordering, each as continues, of and and right? start typically that's at once continue sometimes other. where do you they're every they partially long layer that they quarter, You the they're order the they result lose sometimes we customer of

think that pay projects where off. home in said, some a done place to interesting like not I start we're in And there. So happening There's things entertainment. now can these we we're

good the a a earnings high year, end quarter. we're -- year, guidance. of and is targeting our end our had. of at midpoint our QX the shrinkages money decent where year's lowest up. And Even year-over-year in range lost a And is be to areas offset up a rate the growth This we've we for obviously we QX. now are a QX Last profit. growth we're point guidance some have range growth The over will think of growth. We last pretty is

So...

Operator

I'm like showing it time. back no Arling, closing this remarks. to I CEO, would for now questions further Paul at to turn

Paul D. Arling

today. you and Universal Electronics. interest for us Thanks your for Thank Okay. of joining support continued

remarks, As to will will be the CES. some of least able at come. at we prepared be I we hope said in you

But be we're can to at to and customers of that us, stuff thanks, hope, of pretty and be with busy see you some going all do new early there, lines different seeing we'll great the Otherwise, business If reserve have forward major I you a there. time show, you because day. our will introducing. be the from look

Operator

participation conclude your in does the for This conference. program. you Thank today's

may You now disconnect.

Universal Electronics (UEIC) 7 Nov 242024 Q3 Earnings call transcript