Universal Electronics (NASDAQ:UEIC) reported second-quarter 2026 results showing improved profitability despite a 25% year-over-year decline in revenue, as cost reductions and a one-time tariff-related recovery offset continued weakness in its Connected Home and Home Entertainment markets.
The company also announced a leadership change. Interim Chief Executive Officer and Chief Operating Officer Rick Carnifax stepped down as interim CEO effective Aug. 6, with Chief Financial Officer Wade Jenke appointed as CEO. Carnifax said the transition would not alter the company’s operating plan or the financial framework it reaffirmed for 2026.
Revenue Declines Across Both End Markets
Connected Home revenue declined to $25.1 million from $34.1 million a year earlier, primarily due to lower demand from large climate-control and home-automation customers. Home Entertainment revenue fell to $48.1 million from $63.6 million, with the company attributing the decrease largely to lower demand for subscription broadcasting products.
During the analyst question-and-answer session, Jenke said Daikin represented 21% of quarterly revenue, Comcast accounted for 11.4%, and Sony represented 8%.
Cost Actions Support Profitability
Despite the lower sales base, Universal Electronics reported GAAP operating income of $4.8 million, compared with $1 million in the second quarter of 2025. Adjusted non-GAAP operating income rose to $5.8 million from $2.9 million, while adjusted operating margin increased to 7.9% of sales from 2.9% a year earlier.
GAAP net income was $1.6 million, or $0.12 per diluted share, compared with a net loss of $2.9 million, or $0.22 per diluted share, in the prior-year quarter. Adjusted non-GAAP net income was $4.6 million, or $0.34 per diluted share, versus $2.4 million, or $0.18 per diluted share, a year earlier.
Carnifax said results included a $5.1 million one-time recovery of previously paid tariffs. Excluding that nonrecurring cash recovery, he said the company still moved from an adjusted loss of approximately $0.10 per share in the first quarter to adjusted profit of about $0.04 per share in the second quarter, despite slightly lower revenue.
Adjusted operating expenses declined $6.2 million, or 24%, year over year. Research and development expense decreased to $4.3 million from $7 million, primarily reflecting payroll and personnel reductions following headcount optimization actions. Selling, general and administrative expense fell to $16.8 million from $21.2 million, supported by lower volume-related expenses, organizational changes, and reduced discretionary spending.
“The labor reductions we described last quarter are now carried in the run rate rather than promised into it,” Carnifax said.
Margins, Cash and Inventory
GAAP and adjusted gross margin were both 35.4%, up from 29.9% in the year-earlier quarter. Jenke said tariff claims contributed about 690 basis points to the improvement, while the tariff refund accrual mix effect added about 160 basis points and improved inbound freight management added about 90 basis points.
Those gains were partially offset by higher component costs, which reduced gross margin by about 240 basis points, and the weaker U.S. dollar against the Chinese renminbi, which had a roughly 150-basis-point negative impact.
Cash and cash equivalents totaled $32.4 million at June 30, essentially unchanged from $32.3 million at year-end 2025. Operating cash flow was $5.5 million for the first six months of 2026, aided by an $8.1 million inventory reduction during the period. Inventory ended the quarter at $70 million, down from $77.8 million at year-end.
Management said inventory rose modestly from the first quarter in preparation for expected second-half volume. Lead times for memory, capacitors and printed circuit boards now exceed the company’s planning horizon, according to Carnifax, prompting the company to make forward commitments for materials that can be used across programs.
Available borrowing resources increased to $48.7 million from $42.5 million at the end of 2025, and there were no borrowings outstanding under the company’s U.S. credit line at quarter-end.
Customer Programs and Full-Year Outlook
Universal Electronics cited customer program wins as evidence of continued commercial momentum during its restructuring. Carnifax said the company moved from primary supplier to sole-source provider for a remote-control program with one of its largest video customers, with production scheduled to begin in November.
The company also shipped the first mass-production lot of a new smart thermostat platform for a major HVAC original equipment manufacturer. The customer has requested additional volume in the fourth quarter, although management said broader timing remains affected by component supply and industry integration work. Jenke said the thermostat product had been in development with the customer for several years and that additional production shipments are expected in the second half.
Universal Electronics reaffirmed its fiscal 2026 adjusted non-GAAP diluted earnings guidance of $0.45 to $0.65 per share, compared with $0.31 per share in fiscal 2025. Carnifax said the framework excludes the one-time tariff recovery and is based on cost actions and execution rather than an anticipated rebound in demand.
Jenke said the company has received all tariff refunds it expects to receive, and that the tariff monetization is included in the company’s guidance.
On litigation, Jenke said Universal Electronics filed an action against Amazon on the day of the call to protect its intellectual property rights, though he said the timing of the case remains uncertain. He also said the company’s ongoing litigation involving Roku has a court date scheduled for 2027.
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.
