Universal Electronics (NASDAQ:UEIC) reported a sharp improvement in third-quarter profitability despite a slight decline in revenue, as cost reductions offset pressure from higher component costs and weaker demand for subscription broadcasting products.
The company reaffirmed its full-year adjusted earnings forecast, with CEO and President Wade Jenke saying its plan remains focused on execution rather than a rebound in demand. The call was Jenke’s first quarterly earnings call since his appointment in August.
Net sales declined 1.3% to $89.4 million from $90.6 million a year earlier, but rose from $73.2 million in the second quarter. Adjusted net income more than doubled to $2.3 million, or $0.17 per diluted share, from $1.1 million, or $0.08 per share, a year earlier.
On a GAAP basis, the company posted a net loss of $0.3 million, or $0.03 per diluted share, compared with a loss of $8.3 million, or $0.62 per share, in the prior-year quarter. GAAP operating income was $2.9 million, compared with an operating loss of $4.5 million a year earlier.
Connected Home Growth Offsets Entertainment Decline
Connected Home sales rose approximately 13.4% to $33.8 million, driven primarily by stronger HVAC sales and recently launched smart thermostat products. Jenke said HVAC revenue increased 19% year over year.
Home Entertainment sales fell to $55.6 million from $60.8 million, primarily because of lower demand for subscription broadcasting products, CFO Raymond Ho said. Improved retail performance partially offset the decline.
Jenke said subscription broadcasting demand remains in structural decline because of competition from streaming. He also cited difficult market conditions associated with memory and component cost inflation.
The company was selected as the sole supplier for two operator remote programs scheduled to enter production in the fourth quarter, Jenke said. Its battery-free remote entered mass production with its first customer and has been selected by a second. Universal Electronics also received an order for 2 million remotes supporting a streamlined version of its set-top-boxless solution, to be manufactured in India.
In Connected Home, a smart thermostat program began shipping to a major HVAC equipment manufacturer, with demand running above the customer’s initial requirements, according to Jenke. He also said the company won Daikin’s primary wireless remote program for Asia and a larger share of its fourth-generation Wi-Fi platform for Europe.
Cost Cuts Support Earnings as Margins Contract
Adjusted gross margin fell to 26.3% from 29.1% a year earlier. Ho said higher component costs and a stronger Chinese renminbi hurt margins, partly offset by lower labor and manufacturing costs and lower tariff rates.
Universal Electronics has introduced surcharges and permanent price adjustments that, on an annualized basis, recover roughly three-quarters of the inflation it has identified, Jenke said. The benefit will build as notice periods pass and customers place orders, with most of it beginning in the first quarter of 2027, he said.
Adjusted operating expenses fell 20% year over year to $19.9 million. Jenke said additional permanent cost-reduction actions taken in August and October represent approximately $2.5 million in annualized savings.
Adjusted operating income rose to $3.7 million from $1.6 million. Ho said the company’s global workforce reduction and related actions had helped create a leaner cost structure focused on cash generation and profit improvement.
Cash Position and Full-Year Outlook
Cash and equivalents stood at $41.4 million at quarter end, up $9.1 million from the end of 2025. Operating cash flow was $11.1 million in the quarter and $16.6 million through the first nine months. Borrowings under credit lines declined to $19.4 million from $24.1 million at year-end 2025.
Inventory fell to $70.1 million from $77.8 million at the start of the year. Jenke said the company expects a modest inventory increase in the fourth quarter as it commits to crucial materials for 2027. Lead times for printed circuit boards and capacitors have extended from weeks to months as AI infrastructure absorbs supplier capacity, he said.
Universal Electronics maintained its 2026 adjusted diluted earnings forecast of $0.45 to $0.65 per share, compared with $0.31 in 2025. The company reported $0.42 per share for the first nine months of 2026.
About Universal Electronics (NASDAQ:UEIC)
Universal Electronics Inc (NASDAQ: UEIC) designs, develops and distributes consumer electronics products and technologies that simplify the control of home entertainment and smart-home devices. Its offerings include universal remote controls, wireless home-control products, audio and video accessories, and related software and connected-device solutions.
The company serves original equipment manufacturers, subscription television providers, retailers and consumers. Its products are marketed under the One For All and other company brands, as well as through private-label and licensed-brand arrangements.
