Executive Summary

Q1 2025 delivered modest top-line growth with net sales of $92.33M (up 0.5% y/y) and connected home strength offsetting home entertainment declines; GAAP gross margin held flat at 28.3% .
Versus S&P Global consensus, revenue modestly beat ($92.33M vs $91.99M*) and EPS beat (−$0.12 vs −$0.147*), while EBITDA materially missed ($0.06M vs $3.04M*)—a mixed print with operational improvement but limited EBITDA conversion in the quarter. Values retrieved from S&P Global.*
UEI introduced channel reporting: connected home grew 31% to $31.73M (34% of sales), while home entertainment fell 11% to $60.60M .
Q2 2025 guidance calls for $91–$101M in sales and adjusted EPS of $0.05–$0.15, with connected home up 37–55% y/y and home entertainment down 3–12% y/y; management also plans opportunistic buybacks (778,362 shares authorized) .
Balance sheet and cash cycle improved: $9M operating cash flow, cash of $27.39M, and net debt reduced to ~$3.6M, supporting capital allocation flexibility and repurchases .

What Went Well and What Went Wrong

What Went Well

Connected home channel strength: sales grew 31% y/y to $31.73M; management highlighted new HVAC wins, security thermostats, and Somfy outdoor sensors now shipping .
Cost discipline and cash generation: adjusted operating loss improved to $(1.48)M from $(3.41)M y/y; operating cash flow was $8.98M despite a seasonally low quarter .
Share repurchase catalyst: “We currently have approximately 778,000 shares remaining on our share repurchase authorization, and we will begin to buy back shares at an opportunistic price.” — Bryan Hackworth (CFO) .

What Went Wrong

Home entertainment headwinds: sales decreased by $7.13M (−11%) y/y to $60.60M, with Latin America basic remote demand weaker; subscription broadcasting remains a structural drag .
Limited EBITDA conversion: EBITDA far below consensus in Q1 ($0.06M vs $3.04M*), reflecting seasonality, mix, and lower overhead absorption at reduced volumes. Values retrieved from S&P Global.*
Tariff uncertainty: current 10% levels are manageable via pass-through pricing but could pressure gross margin rate if increased; management emphasized a “wait-and-see” stance and global footprint flexibility .

Financial Results

Quarterly performance (oldest → newest)

Metric	Q3 2024	Q4 2024	Q1 2025
Revenue ($USD Millions)	$102.07	$110.45	$92.33
GAAP Gross Margin %	30.1%	28.4%	28.3%
GAAP Operating Income (Loss) ($M)	$0.42	$(4.35)	$(3.75)
Adjusted Operating Income (Loss) ($M)	$2.57	$4.18	$(1.48)
GAAP Net Income (Loss) ($M)	$(2.66)	$(4.53)	$(6.27)
GAAP Diluted EPS ($)	$(0.20)	$(0.35)	$(0.48)
Adjusted Diluted EPS ($)	$0.10	$0.20	$(0.12)

YoY comparison: Q1 2024 vs Q1 2025

Metric	Q1 2024	Q1 2025
Revenue ($USD Millions)	$91.90	$92.33
GAAP Gross Margin %	28.3%	28.3%
GAAP Operating Loss ($M)	$(6.91)	$(3.75)
GAAP Net Loss ($M)	$(8.65)	$(6.27)
GAAP Diluted EPS ($)	$(0.67)	$(0.48)
Adjusted Diluted EPS ($)	$(0.26)	$(0.12)

Versus S&P Global consensus: Q1 2025

Values retrieved from S&P Global.*

Metric	Consensus*	Actual	Surprise
Revenue ($USD Millions)	$91.99*	$92.33	+$0.34*
Primary EPS ($)	$(0.147)*	$(0.12)	+$0.027*
EBITDA ($USD Millions)	$3.04*	$0.06*	−$2.98*

Segment breakdown

Channel	Q1 2024 ($USD Millions)	Q1 2025 ($USD Millions)
Connected Home	$24.17	$31.73
Home Entertainment	$67.73	$60.60
Total Net Sales	$91.90	$92.33

KPIs and balance sheet highlights

Metric	Q3 2024	Q4 2024	Q1 2025
Cash and Equivalents ($M)	$26.29	$26.78	$27.39
Cash from Operations ($M)	—	—	$8.98
Net Debt ($M)	~$13.6	~10.0	~3.6

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Net Sales ($M)	Q2 2025	—	$91–$101	New
Connected Home Net Sales ($M)	Q2 2025	—	$32–$36	New
Home Entertainment Net Sales ($M)	Q2 2025	—	$59–$65	New
GAAP Diluted EPS ($)	Q2 2025	—	$(0.31) to $(0.21)	New
Adjusted Diluted EPS ($)	Q2 2025	—	$0.05 to $0.15	New
Share Repurchase Authorization	Through Aug 6, 2025	$4.0M or 778,362 shares remaining	Continuing	Maintained

Notes: Management expects gross margin rate improvement in Q2 on FX tailwinds (USD strength vs CNY/VND) and higher overhead absorption; not provided as a numeric range .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3 2024)	Previous Mentions (Q4 2024)	Current Period (Q1 2025)	Trend
Connected Home growth & HVAC wins	Carrier thermostat launch; Daikin roadmap; multiple OEM wins; pipeline building 2026–2028	Momentum; some Q1 2025 revenue pulled into Q4 via GAAP recognition; reiterating 2025 growth	+31% y/y; 34% of sales; new Somfy sensor; growth expected to continue, but quarterly volatility acknowledged	Improving, scaling
Manufacturing footprint optimization	Near completion; margin >30% with Red Sea freight headwind	Mexico downsized; Vietnam ramped; excess overhead no longer excluded	Completed transitions; no “excess overhead” adjustment; margin rate expected to improve in Q2	Structural improvement
Tariffs & macro	Red Sea freight costs elevated; monitoring	China production minimal; Mexico smaller; flexibility to shift to Vietnam	10% tariffs manageable via pass-through; potential rate pressure on gross margin; wait-and-see	Manageable but uncertain
AI/technology (QuickSet, homeSense, TIDE)	QuickSet 7, Nevo AI, energy harvesting remote; monetization via personalization	On-device AI, QuickSet homeSense; monetization opportunities for OEMs	QuickSet updates to 2025 TV models; ultra-low power voice remote shipped in Europe	Expanding deployments
Litigation (Roku)	—	Supreme Court denied Roku review; expect district cases to restart in 2025	Ongoing; no new Q1 developments disclosed	Legal tailwind affirmed
Customer concentration	Daikin 12.4%, Sony 10.6%	Daikin 13.4%, Comcast 10.7%	Daikin 17.7%, Comcast 11.2%	Concentrated, rising HVAC

Management Commentary

“For the first quarter of 2025, the connected home sales comprised 34% of our total sales. And growth in these new categories more than offset the decline stemming from cord cutting.” — Bryan Hackworth (CFO) .
“We started shipping new and innovative outdoor sensor for Somfy, which measures both luminosity and temperature.” — Ramzi Ammari (SVP) .
“At 10% across the board, we’re able to handle [tariffs]… it will have an effect on the gross margin rate… the additional revenue is basically zero calories.” — Bryan Hackworth (CFO) .
“We currently have approximately 778,000 shares remaining on our share repurchase authorization, and we will begin to buy back shares at an opportunistic price.” — Bryan Hackworth (CFO) .

Q&A Highlights

Customer concentration: Two 10%+ customers in Q1—Daikin 17.7% and Comcast 11.2% .
Connected home pipeline: Majority of top-10 HVAC accounts won; shipments underway for at least five; SKU expansion strategy emphasized .
Tariffs and margin: 10% tariff pass-through supports gross margin dollars but compresses rate; company prepared to reconfigure footprint if permanent changes occur .
Gross margin mechanics: Excess overhead adjustments discontinued; footprint transition completed (GTQ closed, Vietnam spun up, Mexico downsized) .
CEO search: Board engaged outside search firm; interim Office of CEO confident in team .

Estimates Context

Q1 2025 results vs consensus: modest revenue beat and EPS beat, but significant EBITDA shortfall (mixed quality). Values retrieved from S&P Global.*
FY 2025 consensus implies revenue decline vs FY 2024 actual ($365.66M* vs $394.88M), and EPS turning modestly positive ($0.065*)—suggesting the Street expects connected home growth but conservative conversion assumptions. Values retrieved from S&P Global.*
Post-Q1 trajectory: Q2 guidance targets a return to adjusted profitability ($0.05–$0.15) supported by connected home strength and margin rate improvement . Analysts may need to reassess EBITDA pacing given Q1 underperformance vs estimates.*

Key Takeaways for Investors

Connected home is now a material growth driver (34% of sales), with credible OEM traction (Daikin, Carrier, Somfy); monitor quarterly volatility tied to HVAC macro and project timing .
Revenue quality mixed: top line beat and improved operating loss, but EBITDA conversion lagged; watch Q2 margin rate improvement and volume absorption .
Home entertainment remains a headwind but shows stabilization in North America/EMEA; product innovation (ultra-low power voice remote, QuickSet updates) supports share retention .
Capital allocation optionality improved: $8.98M operating cash flow, cash $27.39M, net debt ~$3.6M; buyback authorization through Aug 2025 is a near-term trading catalyst, particularly on weakness .
Tariffs and macro risks are manageable but fluid; footprint flexibility (Vietnam, reduced Mexico) should mitigate structural shocks; margin rate may face pressure if tariffs rise .
Litigation backdrop favorable (Roku path cleared), with potential incremental value as cases restart .
Near-term: trade the connected home momentum vs EBITDA execution; Medium-term: thesis hinges on scaling HVAC wins, SKU expansion, and software/AI-enabled monetization (QuickSet/homeSense) .

S&P Global disclaimer: Asterisk-marked values are consensus/actuals retrieved from S&P Global and do not include document citations.

UNIVERSAL ELECTRONICS INC (UEIC)·Q1 2025 Earnings Summary