SCOTTSDALE, AZ – February 15, 2024 – Universal Electronics Inc. (UEI), (NASDAQ: UEIC) reported financial results for the three and twelve months ended December 31, 2023.

Paul Arling, UEI’s chairman and CEO, said, “We are building for a better future. During 2023, we successfully advanced our transformation, increasing our focus in growth areas such as home automation and climate control. We are executing our efficiency initiatives, and our strong gross margins delivered better than expected earnings per share for the fourth quarter of 2023. We believe a more efficient factory footprint coupled with project wins in the connected home channels will generate earnings growth and full year profitability. Confident in our strategy and long-term growth, we plan to continue our share repurchase program.

“Furthermore, our intellectual property is being recognized. In January 2024, the U.S. Court of Appeals for the Federal Circuit affirmed a prior ruling by the U.S. International Trade Commission, once again validating UEI’s valuable IP and confirming Roku’s infringement of our patent. This decision supports us in returning to the U.S. District Court to request judgment on monetary damages regarding the infringing activities of Roku and its TV partners.”

•GAAP net sales were $97.6 million, compared to $122.8 million; Adjusted Non-GAAP net sales were $97.6 million, compared to $122.8 million.

•GAAP gross margins were 28.5%, compared to 26.2%; Adjusted Non-GAAP gross margins were 30.2%, compared to 30.7%.

•GAAP operating loss was $2.6 million, compared to $1.9 million; Adjusted Non-GAAP operating income was $1.8 million, compared to $8.3 million.

•GAAP net loss was $7.1 million, or $0.55 per share, compared to $6.9 million, or $0.54 per share; Adjusted Non-GAAP net income was $0.9 million, or $0.07 per diluted share, compared to $5.6 million, or $0.44 per diluted share.

•At December 31, 2023, cash and cash equivalents were $42.8 million.

•GAAP net sales were $420.5 million, compared to $542.8 million; Adjusted Non-GAAP net sales were $420.5 million, compared to $542.8 million.

•GAAP gross margins were 23.2%, compared to 28.1%; Adjusted Non-GAAP gross margins were 27.3%, compared to 29.9%.

•GAAP operating loss was $85.3 million, including a $49.1 million non-cash charge for goodwill impairment, which resulted from a decline in the company’s market capitalization, compared to GAAP operating income of $14.5 million; Adjusted Non-GAAP operating loss was $0.8 million, compared to Adjusted Non-GAAP operating income of $41.8 million.

•GAAP net loss was $98.2 million, including the aforementioned non-cash charge, or $7.64 per share, compared to GAAP net income of $0.4 million, or $0.03 per diluted share; Adjusted Non-GAAP net loss was $2.3 million, or $0.18 per share, compared to Adjusted Non-GAAP net income of $32.7 million, or $2.56 per diluted share.

For the first quarter of 2024, the company expects GAAP net sales to range between $86 million and $96 million, compared to $108.4 million in the first quarter of 2023. GAAP loss per share for the first quarter of 2024 is expected to range from $0.88 to $0.78, compared to a GAAP loss per share of $4.81 in the first quarter of 2023.

For the first quarter of 2024, the company expects Adjusted Non-GAAP net sales to range between $86 million and $96 million, compared to $108.4 million in the first quarter of 2023. Adjusted Non-GAAP loss per share is expected to range from $0.27 to $0.17 compared to Adjusted Non-GAAP loss of $0.28 per share in the first quarter of 2023. The first quarter 2024 Adjusted Non-GAAP loss per share estimate excludes $0.61 per share related to, among other things, excess manufacturing overhead costs, stock-based compensation, amortization of acquired intangibles, litigation costs, foreign currency gains and losses and the related tax impact of these adjustments. For a more detailed explanation of Non-GAAP measures, please see the Use of Non-GAAP Financial Metrics discussion, the Reconciliation of Adjusted Non-GAAP Financial Results and the Reconciliation of Adjusted Non-GAAP Financial Outlook and Financial Results, each located elsewhere in this press release.

UEI’s management team will hold a conference call today, Thursday, February 15, 2024 at 4:30 p.m. ET / 1:30 p.m. PT, to discuss its fourth quarter and full year 2023 earnings results, review recent activity and answer questions. To attend the call please register at https://register.vevent.com/register/BI35d5b7be44324d4b81078a07b9cec576 to receive a computer-generated dial-in number and a unique pin number. The conference call will also be broadcast live on the investor section of the UEI website where it will be available for replay for 90 days.

In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, UEI provides Adjusted Non-GAAP information as additional information for its operating results. References to Adjusted Non-GAAP information are to non-GAAP financial measures. These measures are not required by, in accordance with, or an alternative for, GAAP and may be different from non-GAAP financial measures used by other companies. UEI’s management uses these measures for reviewing the financial results of UEI for budget planning purposes and for making operational and financial decisions. Management believes that providing these non-GAAP financial measures to investors, as a supplement to GAAP financial measures, help investors evaluate UEI’s core operating and financial performance and business trends consistent with how management evaluates such performance and trends. Additionally, management believes these measures facilitate comparisons with the core operating and financial results and business trends of competitors and other companies.

Adjusted Non-GAAP net sales is defined as net sales. Adjusted Non-GAAP gross profit is defined as gross profit excluding the impact of excess manufacturing overhead costs, factory transition costs, impairment, stock-based compensation expense and depreciation expense related to the increase in fixed assets from cost to fair market value resulting from acquisitions. Adjusted Non-GAAP operating expenses are defined as operating expenses excluding stock-based compensation expense, amortization of intangibles acquired, costs associated with certain litigation efforts, goodwill impairment, impairment, factory restructuring costs and severance. Adjusted Non-GAAP net income is defined as net income excluding the aforementioned items, foreign currency gains and losses, the related tax effects of all adjustments, as well as a valuation allowance on certain deferred tax assets. Adjusted Non-GAAP earnings (loss) per diluted share is calculated using Adjusted Non-GAAP net income. A reconciliation of these financial measures to the most directly comparable GAAP financial measures is included at the end of this press release.

Universal Electronics Inc. (NASDAQ: UEIC) is the global leader in wireless universal control solutions for home entertainment and smart home devices and designs, develops, manufactures, ships and supports hardware and software control and sensor technology solutions. UEI partners with many Fortune 500 customers, including Comcast, Vivint Smart Home, Samsung, LG, Sony and Daikin to serve video, telecommunications, security service providers, television, smart home and HVAC system manufacturers. For over 37 years, UEI has been pioneering breakthrough innovations such as voice control and QuickSet cloud, the world's leading platform for automated set-up and control of devices in the home. For more information, visit www.uei.com.

Paul Arling, Chairman & CEO, UEI, 480-530-3000

Investors: Kirsten Chapman, LHA Investor Relations, uei@lhai.com, 415-433-3777

This press release and accompanying schedules contain "forward-looking statements" within the meaning of federal securities laws, including net sales, profit margin and earnings trends, estimates and assumptions; our expectations about new product introductions; and similar statements concerning anticipated future events and expectations that are not historical facts. We caution you that these statements are not guarantees of future performance and are subject to numerous risks and uncertainties, including those we identify below and other risk factors that we identify in our annual report on Form 10-K for the year ended December 31, 2022 and the periodic reports filed and furnished since then. Risks that could affect forward-looking statements in this press release include: our continued ability to timely develop and deliver products and technologies that will be accepted by our customers, both near- and long-term; our ability to attract new customers and to successfully capture sales in all markets we serve, including in the home automation, climate control, and connected home markets as anticipated by management; our ability to continue optimizing our manufacturing footprint and realize the lower concentration risks in the time frame and to the extent expected by management; the slowdown of the traditional subscription broadcast market dissipating as expected by management, our ability to manage through the supply chain constraints, inflationary pressures and macroeconomic conditions, including continued lower consumer spending; the continued commitment of our customers to their product development and ordering strategies and patterns that translate into greater demand for our technologies and products as anticipated by management; our ability to continue to manage our business, inventories and cash flows to achieve our net sales, margins and earnings through financial discipline, operational efficiency, product line management, liquidity requirements, capital expenditures and other investment spending expectations, including our ability to execute on our stock repurchase programs; the Company’s continued ability to successfully enforce its patented technology against Roku; the continued fluctuation in our market capitalization; the direct and indirect impact we may experience with respect to our business and financial results and management’s ability to anticipate and mitigate the impact stemming from the continued economic uncertainty affecting consumers’ confidence and spending, natural disasters or other events beyond our control, public health crises (including an outbreak of infectious disease), governmental actions, including the effects of political unrest, war, terrorist activities, or other hostilities; the effects and uncertainties and other factors more fully described in our reports filed with the SEC; and the effects that changes in or enhanced use of laws, regulations and policies may have on our business including the impact of trade regulations pertaining to importation of our products. Since it is not possible to predict or identify all of the risks, uncertainties and other factors that may affect future results, the above list should not be considered a complete list. Further, any of these factors could cause actual results to differ materially from the expectations we express or imply in this press release. We make these forward-looking statements as of February 15, 2024, and we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

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(1)The three and twelve months ended December 31, 2023 and 2022 include unabsorbed manufacturing overhead costs resulting from the expansion of our manufacturing facility in Mexico where products destined for the U.S. market are manufactured, exacerbated by a subsequent decline in production volume. These products destined for the U.S. market were previously manufactured in China. The three and twelve months ended December 31, 2023 also include manufacturing inefficiencies associated with our new Vietnam factory which commenced operations in the latter part of June 2023. In addition, in the twelve months ended December 31, 2023 and the three and twelve months ended December 31, 2022, we incurred normal start-up costs such as idle labor and training associated with the Vietnam factory prior to its commencement.

(2)The twelve months ended December 31, 2023 include impairment charges relating to machinery and equipment and leasehold improvements associated with the closure of our southwestern China factory, which ceased operations in September 2023. In addition, we also incurred impairment charges relating to machinery and equipment at our Mexico factory as we are reducing its capacity due to lower demand. The three and twelve months ended December 31, 2022 include impairment charges incurred related to the underutilization of fixed assets in our Mexico factory.

(3)Consists of depreciation related to the mark-up from cost to fair value of fixed assets acquired in business combinations.

(4)Consists of expenses related to our various litigation matters involving Roku, Inc. and certain other related entities including three Federal District Court cases, two International Trade Commission investigations and the defense of various inter partes reviews and appeals before the US Patent and Trademark Board as well as other non-recurring legal matters.

(5)During the twelve months ended December 31, 2023, we recorded a goodwill impairment charge of $49.1 million as a result of our market capitalization being significantly less than the carrying value of our equity.

(6)The three and twelve months ended December 31, 2023 include severance and equipment moving costs associated with the closure of our southwestern China factory.

(7)The three and twelve months ended December 31, 2023 include severance costs associated with a reduction in headcount at our corporate offices.

(8)The twelve months ended December 31, 2023 includes a $1.4 million valuation allowance recorded against the deferred tax assets at our southwestern China entity as a result of its closure.

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(1)The three months ended March 31, 2024 and 2023 do not include any Non-GAAP adjustments to net sales.

(2)The three months ended March 31, 2024 and 2023 includes adjustments for excess manufacturing overhead costs, factory transition costs, stock-based compensation expense, depreciation expense related to the increase in fixed assets from cost to fair market value resulting from acquisitions, amortization of acquired intangibles, costs associated with certain litigation efforts, foreign currency gains and losses and the related tax impact of these adjustments. The three months ended March 31, 2023 also includes adjustments for goodwill impairment.