Universal Electronics (NASDAQ:UEIC) reported first-quarter 2026 revenue of $79 million, down 14.4% from $92.3 million a year earlier, as the company continued to face pressure in both its home entertainment and Connected Home businesses.
Interim CEO and Chief Operating Officer Rick Carnifax said the quarter was consistent with the environment the company described previously, including “HVAC industry consolidation, European retail pressure, and extended customer deployment timelines.” He said Universal Electronics is focusing on areas it can control, including cost discipline, portfolio prioritization and cash generation, rather than relying on a near-term rebound in demand.
Revenue Declines Across Both End Markets
Chief Financial Officer Wade Jenke said Connected Home net sales were $28.3 million, down from $31.7 million in the prior-year quarter. He said long-term demand for Connected Home products remains, but adoption and volume ramp-up are taking longer than the company initially expected.
Home entertainment net sales were $50.7 million, compared with $60.6 million a year earlier. Jenke attributed the decline to continued secular pressure in subscription broadcasting markets and lower volume across global consumer electronics and retail customers.
Carnifax said Connected Home growth remains “slower and less predictable” than the company projected during the first half of 2025. He noted that engagement around the company’s homeSense occupancy sensing technology and Tide smart thermostat portfolio is ongoing, with roadmap discussions involving new HVAC OEM prospects in North America.
In home entertainment, Carnifax said Universal Electronics is managing the business conservatively by driving profitability, reducing costs, simplifying the product line and optimizing its supply chain footprint. He also said memory costs and allocation issues continue to create forecast volatility in parts of the set-top box market, while European consumer demand remains pressured.
Cost Cuts Begin to Take Hold
Management emphasized restructuring actions aimed at aligning the company’s cost base with lower revenue expectations. Carnifax said adjusted non-GAAP operating expenses declined by $5.3 million year-over-year in the first quarter. He also said decisions made and actions started during the quarter are expected to reduce labor expense by about $5 million on an annualized run-rate basis.
Jenke said Universal Electronics executed a global reduction in force, primarily affecting selling, general and administrative roles, along with select engineering and R&D positions. The company expects approximately $5 million in annualized cost savings from those actions, with one-time severance costs of about $1.3 million.
“Importantly, these actions are structural in nature and will create a leaner cost profile,” Jenke said.
Research and development expenses fell to $5.4 million from $7.2 million a year earlier. Carnifax said the company is directing resources toward initiatives with “the clearest path to accretive return” and reducing activities that do not meet that threshold.
Margins Remain Under Pressure
Adjusted non-GAAP gross profit was $20.6 million, or 26.1% of sales, compared with 28.3% in the prior-year period. Jenke said the margin decline was primarily driven by lower volume and absorption, as well as unfavorable product mix that reduced gross margin by 1.7 percentage points. He said most of the mix impact came from lower retail sales, which the company expects to be comparatively temporary.
Tariff costs also weighed on quarterly margin, though Jenke said they were partially offset by favorable purchase savings, productivity improvements and foreign exchange benefits.
GAAP operating loss for the quarter was $3.9 million, compared with a loss of $3.8 million a year earlier. Adjusted non-GAAP operating loss was $1.6 million, compared with $1.5 million in the prior-year quarter. Adjusted non-GAAP net loss improved to $1.3 million, or $0.10 per diluted share, from a loss of $1.5 million, or $0.12 per share, a year ago.
Inventory Reduction Supports Cash Focus
Universal Electronics ended the quarter with $29.8 million in cash and cash equivalents. Operating cash flow declined modestly by $0.8 million, which Jenke attributed mainly to timing, reductions in accrued liabilities and restructuring costs.
The company highlighted progress on working capital, particularly inventory. Carnifax said inventories were reduced by $9.8 million, describing the effort as part of the broader simplification strategy. Jenke also noted that accounts receivable and contract assets declined by approximately $2.8 million sequentially.
“Working capital efficiency and cash generation remain top financial priorities for us in 2026,” Jenke said.
Full-Year Earnings Outlook Reaffirmed
Universal Electronics reaffirmed its full-year 2026 framework, including adjusted non-GAAP diluted earnings per share of $0.45 to $0.65, compared with $0.31 in fiscal 2025. Management said revenue is still expected to decline year-over-year, reflecting ongoing headwinds in home entertainment and the slower scale-up of Connected Home products.
Jenke said the company’s guidance remains consistent as it executes its 2026 business plan, adding that management’s confidence has increased as visibility into the full year has improved.
Carnifax said the company’s outlook is based on “execution, cost alignment, portfolio focus, and working capital discipline,” rather than an expectation that demand will recover quickly. He said Universal Electronics remains focused on improving profitability, generating cash and rebuilding flexibility to become “stronger and more resilient over time.”
No analysts asked questions during the call’s question-and-answer session.
About Universal Electronics (NASDAQ:UEIC)
Universal Electronics Inc (NASDAQ:UEIC) is a leading provider of sensing and control technologies for the smart home and consumer electronics markets. The company specializes in design, development and manufacturing of remote control devices, wireless connectivity modules and integrated sensing solutions. Its core expertise lies in infrared (IR) and radio frequency (RF) remote controls, voice-enabled control devices and universal remotes that allow consumers to manage multiple home entertainment and automation systems through a single interface.
In addition to traditional remote control products, Universal Electronics has expanded its portfolio to include Internet of Things (IoT) gateways, home-automation hubs and cloud-based management platforms.
