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What changed in UNIVERSAL ELECTRONICS INC's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of UNIVERSAL ELECTRONICS INC's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+281 added−312 removedSource: 10-K (2026-03-12) vs 10-K (2025-03-11)

Top changes in UNIVERSAL ELECTRONICS INC's 2025 10-K

281 paragraphs added · 312 removed · 192 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

56 edited+33 added−89 removed51 unchanged
Biggest changeOur sales channel strategy is to partner with customers who are leaders in their respective industries: in consumer electronics, we count Samsung Electronics Co., Sony Group Corporation and LG Electronics as long-term accounts that represent a significant share of their industry; in cable video services, Comcast Corporation, Liberty Global and Vodafone Group rank amongst the largest video service providers in their respective markets; in Satellite services, Dish Network Corporation, Sky plc, Bharti Airtel Limited and DIRECTV represent the majority of global service providers; in climate control, Daikin Industries Ltd., Trane Technologies and Carrier Global Corporation are customers that represent top market share leaders in the global HVAC industry; and in security, safety and home automation, Vivint Smart Home, Somfy SA, Ring LLC and Hunter Douglas NV are channel leaders in their respective connected home markets.
Biggest changeIn climate control, Daikin Industries Ltd., Fujitsu General, Mitsubishi Electric, LG HVAC and Carrier Global Corporation are customers that represent top market share leaders in the global HVAC industry. In security, safety and home automation, Vivint Smart Home, Somfy SA, SimpliSafe, and Hunter Douglas NV are channel leaders in their respective connected home markets.
We make our periodic and current reports, together with amendments to these reports, available on our website, free of charge, as soon as reasonably practicable after such material is electronically filed with, or furnished to, the U.S. Securities and Exchange Commission ("SEC").
We make our periodic and current reports, together with amendments to these reports, available on our website, free of charge, as soon as reasonably practicable after such material is electronically filed with, or furnished to, the U.S. Securities and Exchange Commission (the "SEC").
We conduct regular internal audits in line with RBA and have engaged in third-party Sedex Members Ethical Trade Audits ("SMETA") and RBA audits in our factories and regularly monitor ethics-related key performance indicators. In July 2024, our manufacturing facility in Vietnam successfully completed the RBA Validated Assessment Program ("VAP") audit achieving a Silver VAP Recognition Level.
We conduct regular internal audits in line with RBA, have engaged in third-party Sedex Members Ethical Trade Audits ("SMETA") and RBA audits in our factories and regularly monitor ethics-related key performance indicators. In July 2024, our manufacturing facility in Vietnam successfully completed the RBA Validated Assessment Program ("VAP") audit, achieving a Silver VAP Recognition Level.
Our manufacturing capabilities include high-quality surface mount technology, zero-gap, plastic injection, acoustic design, painting, keypad, robot soldering, and laser etching. We currently operate manufacturing and assembly factories in the PRC, Vietnam, Mexico and Brazil, which allows us to produce in the regional markets. We also use selected third-party manufacturers and suppliers in Asia and India.
Our manufacturing capabilities include high-quality surface mount technology, zero-gap, plastic injection, acoustic design, painting, keypad, robot soldering, and laser etching. We currently operate manufacturing and assembly factories in the PRC, Vietnam and Brazil, which allows us to produce in the regional markets. We also use selected third-party manufacturers and suppliers in Asia and Mexico.
Our R&D locations are as follows: • advanced engineering, architecture and cloud teams are located in Santa Ana, California, and Scottsdale, Arizona; • cloud architecture, software and service teams are located in Santa Ana and San Mateo, California; • sensor engineering and R&D teams are located in Carlsbad and Poway, California; • connected thermostat engineering and R&D teams are located in Santa Ana and Poway, California; • hardware engineering teams are located in Panyu and Suzhou in the PRC; • software, firmware and device database teams are located in Bangalore, India; and • a software services team focused on support software solutions is located in Plymouth, Minnesota.
Our R&D locations are as follows: • advanced engineering, architecture and cloud teams are located in Santa Ana, California, and Scottsdale, Arizona; • cloud architecture, software and service teams are located in Santa Ana and San Mateo, California; • sensor engineering and R&D teams are located in Poway, California; • connected thermostat engineering and R&D teams are located in Santa Ana and Poway, California; • hardware engineering teams are located in Panyu and Suzhou in the PRC; • software, firmware and device database teams are located in Bangalore, India; and • a software services team focused on support software solutions is located in Plymouth, Minnesota.
Global Locations and Subsidiaries We operate on a global scale with research and development ("R&D") teams in the U.S., Europe, the PRC and India. The company has diversified manufacturing facilities in Vietnam, the PRC, Mexico and Brazil. This global presence allows us to leverage our scale and reach to deliver innovative products and solutions to customers worldwide.
Global Locations and Subsidiaries We operate on a global scale with research and development ("R&D") teams in the U.S., Europe, the PRC and India. The company has diversified manufacturing facilities in Vietnam, the PRC and Brazil. This global presence allows us to leverage our scale and reach to deliver innovative products and solutions to customers worldwide.
During 2024, we utilized multiple third-party manufacturers and maintained duplicate tooling for certain of our products. Where possible, we utilize standard parts and components, which are available from multiple sources. We are a large consumer of integrated circuits, including low-power, RF chips and modules that are used throughout our products.
During 2025, we utilized multiple third-party manufacturers and maintained duplicate tooling for certain products. Where possible, we utilize standard parts and components, which are available from multiple sources. We are a large consumer of integrated circuits, including low-power, RF chips and modules that are used throughout our products.
We have strategically developed a global manufacturing footprint to enhance efficiency and mitigate risks associated with international trade policies to better serve our global customer base. Even though we operate one factory in the PRC, one factory in Vietnam and manufacturing and assembly plants in Mexico and Brazil, respectively, we continue to evaluate additional third-party manufacturers and sources of supply.
We have strategically developed a global manufacturing footprint to enhance efficiency and mitigate risks associated with international trade policies to better serve our global customer base. Even though we operate one factory in the PRC, one factory in Vietnam and a manufacturing and assembly plant in Brazil, respectively, we continue to evaluate additional third-party manufacturers and sources of supply.
These limits, regulations, and tariffs, especially those pertaining to or affecting relations between the United States and the PRC, might significantly disrupt our business, affecting our capacity to manufacture, source components and sell goods. The new U.S. administration has introduced new policies imposing additional tariffs on goods manufactured abroad, including goods manufactured in the PRC and Mexico.
These limits, regulations, and tariffs, especially those pertaining to or affecting relations between the United States and the PRC, might significantly disrupt our business, affecting our capacity to manufacture, source components and sell goods. The current U.S. administration has introduced new policies imposing additional tariffs on goods manufactured abroad, including goods manufactured in the PRC, Brazil, Vietnam and Mexico.
Our principal competitors in the home entertainment market are Remote Solutions, Home Control International, SMK, Ohsung, Tech4Home and Ruwido. In the climate control market, we compete with regional specialists and global companies such as Resideo, Emerson and Venstar, as well as Far East based OEM manufacturers such as Computime, who compete with us on customer RFQs.
Our principal competitors in the home entertainment market are Remote Solutions, Home Control International, Tech4Home and Ruwido. In the climate control market, we compete with regional specialists and global companies such as Resideo, Copeland-Emerson and Venstar, as well as Far East based OEM manufacturers such as Computime, who compete with us on customer RFQs.
As an example, we have replaced volatile organic compounds ("VOC") emitting inks and paints with reduced-VOC paints at some of our manufacturing facilities. We strive to extend the useful life of our products and reduce our products' impact on the environment. We have invested in R&D to improve the energy efficiency of our battery-operated products.
For example, we have replaced volatile organic compounds ("VOC") emitting inks and paints with reduced-VOC paints at some of our manufacturing facilities. We strive to extend the useful life of our products and reduce our products' impact on the environment. We have invested in R&D to improve the energy efficiency of our battery-operated products.
Our products distributed in the European Union are compliant with the RoHS (Restriction of Hazardous Substances Directive 2011/65/EU and 2015/863/EU) and REACH (Registration, Evaluation, Authorisation and Restriction of Chemicals) directives.
Our products distributed in the European Union are compliant with the RoHS (Restriction of Hazardous Substances Directive 2011/65/EU and 2015/863/EU) and REACH (Registration, Evaluation, Authorization and Restriction of Chemicals) directives.
ITEM 1. BUSINESS Universal Electronics Inc. ("UEI" or the "Company") was incorporated under the laws of Delaware in 1986 and began operations in 1987. The principal executive offices are located at 15147 N. Scottsdale Road, Suite H300, Scottsdale, Arizona 85254.
ITEM 1. BUSINESS Universal Electronics Inc. ("UEI", "we", "our", "us", or the "Company") was incorporated under the laws of Delaware in 1986 and began operations in 1987. The principal executive offices are located at 15147 N. Scottsdale Road, Suite H300, Scottsdale, Arizona 85254.
We have established an executive-level Environmental Working Group to further integrate environmental considerations throughout the product lifecycle, ensure compliance with environmental regulations and customer requirements, implement sustainable practices in our operations, reduce our product's environmental footprint, and deliver more cost-effective and lower carbon technology solutions to our customers.
We have established an executive-level Environmental Working Group to further integrate environmental considerations throughout the product lifecycle, ensure compliance with environmental regulations and customer requirements, implement sustainable practices in our operations, reduce our product's environmental footprint, and deliver more 10 Table of Contents cost-effective and lower carbon technology solutions to our customers.
The consumer demand to upgrade to smart thermostats is driven by the integration of intelligent climate control solutions for enhanced user comfort and energy efficiency, increased cloud connectivity, support for smart home ecosystems and the adoption of energy management platforms utilizing occupancy and presence detection technology.
The consumer demand to upgrade to smart thermostats is driven by the integration of intelligent climate control solutions for enhanced user comfort and energy efficiency, increased cloud connectivity, support for smart home ecosystems and the adoption of energy management platforms utilizing occupancy and presence detection technology, such as QuickSet homeSense.
However, due to the heightened awareness of corporate environmental, social and governance ("ESG") matters and evolving laws and regulations or enforcement policies, increases in compliance costs may have a material adverse effect upon our capital expenditures, earnings or financial condition. We are committed to reducing and eliminating substances of concern from our products and manufacturing process.
However, due to the heightened awareness of corporate sustainability, human capital and governance matters and evolving laws and regulations or enforcement policies, increases in compliance costs may have a material adverse effect upon our capital expenditures, earnings or financial condition. We are committed to reducing and eliminating substances of concern from our products and manufacturing process.
As part of the execution of this strategy, we (1) opened a new factory in Vietnam, which commenced operations in June 2023, (2) stopped production activities in our southwestern PRC factory in the third quarter 2023 and completed its shutdown in the first quarter 2024, (3) stopped production activities and shutdown operations of our smaller eastern PRC factory during the fourth quarter 2024 and (4) downsized and streamlined our Mexico operations throughout 2024.
As part of the execution of this strategy, we (1) opened a new factory in Vietnam, which commenced operations in June 2023, (2) stopped production activities in our southwestern PRC factory in the third quarter 2023 and completed its shutdown in the first quarter 2024, (3) stopped production activities and shutdown operations of our smaller eastern PRC factory during the fourth quarter 2024 and (4) discontinued our Mexico operations in 2025.
Labor unions represent approximately 12.0% of our 3,838 employees as of December 31, 2024. Some of these unionized workers are employed in Monterrey, Mexico, and are represented under contract with the Sindicato Industrial de Trabajadores de Nuevo León adherido a la Federación Nacional de Sindicatos Independientes.
Labor unions represent approximately 6.0% of our 3,099 employees as of December 31, 2025. Some of these unionized workers are employed in Monterrey, Mexico, and are represented under contract with the Sindicato Industrial de Trabajadores de Nuevo León adherido a la Federación Nacional de Sindicatos Independientes.
Government regulations are subject to change; therefore, we are unable to predict the impact of complying with potential future requirements or whether doing so will materially affect our operations, financial situation or business. 11 Table of Contents Human Capital As of December 31, 2024, we employed 3,838 members of staff across our worldwide facilities.
Government regulations are subject to change; therefore, we are unable to predict the impact of complying with potential future requirements or whether doing so will materially affect our operations, financial situation or business. Human Capital As of December 31, 2025, we employed 3,099 members of staff across our worldwide facilities.
Resources Engineering Our development resources include approximately 540 engineering and R&D team members worldwide, who are dedicated to designing and developing cutting-edge consumer control products, technologies and software services. We invest heavily in technology and product innovation, focusing on creating smarter living solutions for our customers.
Ltd., established in the PRC. Research and Development Engineering Our development resources include approximately 390 engineering and R&D team members worldwide, who are dedicated to designing and developing cutting-edge consumer control products, technologies and software services. We invest heavily in technology and product innovation, focusing on creating smarter living solutions for our customers.
Unionized workers, employed in Manaus, Brazil, are represented under contract with the Sindicato dos Trabalhadores nas Industrias Metalugicas, Mecanicas e de Materiais Eletricos de Manaus. Additionally, workers at our Vietnam facility are covered by a collective bargaining agreement. 12 Table of Contents These workers represent approximately 17.0% of our 3,838 employees as of December 31, 2024.
Unionized workers, employed in Manaus, Brazil, are represented under contract with the Sindicato dos Trabalhadores nas Industrias Metalugicas, Mecanicas e de Materiais Eletricos de Manaus. Additionally, workers at our Vietnam facility are covered by a collective bargaining agreement. These workers represent approximately 20.0% of our 3,099 employees as of December 31, 2025.
In February 2023, he was promoted to his current position. Prior to joining us, from March 2019 until May 2020, Mr. Carnifax was the Chief Operating Officer at Cast Nylons, a privately held manufacturer and distributor of cast nylon stock shapes and custom cast parts, and was Vice President, Operations at Cast Nylons from November 2017 until March 2019.
Prior to joining us, from March 2019 until May 2020, Mr. Carnifax was the Chief Operating Officer at Cast Nylons, a privately held manufacturer and distributor of cast nylon stock shapes and custom cast parts, and was Vice President, Operations at Cast Nylons from November 2017 until March 2019.
Comcast-Charter's Xumo TV, Tivo Stream, Comcast's Flex, Sky Glass and DISH Sling are examples of current customer offerings of these types of services.
Comcast-Charter's Xumo TV, Tivo Stream, and Sky Glass are examples of current customer offerings of these types of services.
Ltd., established in Hong Kong; • Universal Electronics B.V., established in the Netherlands; • Universal Electronics Italia S.R.L., established in Italy; • Universal Electronics Yangzhou Co. Ltd., established in the PRC; • Universal Electronics do Brasil Ltda., established in Brazil; and • Yangzhou Universal Trading Co. Ltd., established in the PRC.
Ltd., established in Hong Kong; • Universal Electronics B.V., established in the Netherlands; • Universal Electronics Holdings, LLC; established under the laws of Delaware; • Universal Electronics Italia S.R.L., established in Italy; • Universal Electronics Yangzhou Co. Ltd., established in the PRC; • Universal Electronics do Brasil Ltda., established in Brazil; and • Yangzhou Universal Trading Co.
Of this staff, 2,928 are associated with our manufacturing and supply chain organizations in the PRC, Vietnam, Mexico and Brazil. Beyond the manufacturing and supply chain organizations, 542 of staff work in engineering and R&D, 105 in sales, marketing, consumer service and support and 263 in executive and administrative functions.
Of this staff, 2,392 are associated with our manufacturing and supply chain organizations in the PRC, Vietnam, Mexico and Brazil. Beyond the manufacturing and supply chain organizations, 390 of our staff work in engineering and R&D, 96 in sales, marketing, consumer service and support and 221 in executive and administrative functions.
Because of the nature of R&D activities, there can be no assurance that any of our R&D projects will be successfully completed or ultimately achieve commercial success. Intellectual Property and Technology A key factor in creating products and software for home entertainment and smart home device control is our proprietary device knowledge libraries.
Because of the nature of R&D activities, there can be no assurance that any of our R&D projects will be successfully completed or ultimately achieve commercial success. Intellectual Property and Technology A key factor in our ability to deliver advanced home entertainment, climate control and smart home solutions is our proprietary device knowledge libraries and discovery technologies.
During 2024, our development teams successfully completed and released new products in the connected home space for customers such as Daikin, Carrier, Mitsubishi, Somfy and Vivint, the majority of which launched in the back half of the year. During 2024, our advanced engineering efforts focused on further developing our existing products, services and technologies.
During 2025, our development teams successfully completed and released new products in the connected home space for customers such as Daikin, Carrier, Mitsubishi, Somfy, SimpliSafe, and Vivint. During 2025, our advanced engineering efforts focused on further developing our existing products, services and technologies.
We have one domestic subsidiary and 24 international subsidiaries located in Brazil, British Virgin Islands, France, Germany, Hong Kong (3), India, Italy, Japan, Korea, Mexico (2), the Netherlands, the People's Republic of China (the "PRC") (6), Singapore, Spain, United Kingdom and Vietnam.
We have two domestic subsidiaries and 22 international subsidiaries located in Brazil, France, Germany, Hong Kong (3), India, Italy, Japan, Korea, Mexico (2), the Netherlands, the People's Republic of China (the "PRC") (5), Singapore, Spain, United Kingdom and Vietnam.
Ltd., established in the PRC; • UE Japan Ltd., established in Japan; • UE Korea Ltd., established in South Korea; • UE Singapore Pte. Ltd., established in Singapore; • UE Vietnam Company Limited, established in Vietnam; • UEI Electronics Pte. Ltd., established in India; • UEI Hong Kong Pte.
Ltd., established in the PRC; • UE Japan Ltd., established in Japan; • UE Korea Ltd., established in South Korea; • UE Singapore Pte. Ltd., established in Singapore; • UE Vietnam Company Limited, established in Vietnam; • UEI Electronics Pte. Ltd., established in India; • UE Holdings, LLC; established under the laws of Delaware; • UEI Hong Kong Pte.
Additionally, in the PRC, as is standard practice, we work with third-party agencies who have recruited and provided us with workers to support our production activities.
Additionally, in the PRC, we work with third-party agencies who have recruited and provided us with a small percentage of our workers to support our production activities.
Each of our manufacturing facilities has standing policies and targets for the monitoring and management of waste generation and energy consumption and is focused on reducing electricity consumption, water usage and greenhouse gas emissions.
Our teams continue to examine practices and processes throughout our facilities to identify opportunities for greater energy efficiency. Each of our manufacturing facilities has standing policies and targets for the monitoring and management of waste generation and energy consumption and is focused on reducing electricity consumption, water usage and greenhouse gas emissions.
Our long-term factory planning strategy is to de-risk our reliance on a PRC-based supply chain by (1) reducing our manufacturing concentration in the PRC, (2) pursuing lower cost jurisdictions for manufacturing to help ensure market competitive products and (3) offering customers a flexible and globally diverse manufacturing footprint to provide a reliable and cost-efficient supply chain.
Our long-term factory planning strategy is to reduce our reliance on any single region and, in some cases, transition away from vertical integration and associated fixed costs, by (1) reducing our manufacturing concentration in the PRC, (2) pursuing lower cost jurisdictions for manufacturing to help ensure market competitive products and (3) offering customers a flexible and globally diverse manufacturing footprint to provide a reliable and cost-efficient supply chain.
We have a strong presence in the global market, with a top-tier customer base that includes four of the top five global smart TV brands and five of the top ten HVAC OEM brands. Our products are used by major video service providers, consumer electronics companies and home automation and security brands.
We have a strong presence in the global market, with a top-tier customer base that includes major global smart TV brands and HVAC OEM brands. Our products are used by major video service providers, consumer electronics companies and home automation and security brands. Our channel strategy is to partner with customers who are leaders in their respective industries.
Ammari worked at Mitsubishi Consumer Electronics of America for four years as 13 Table of Contents Business Planning Manager where he was responsible for introducing the first flat-screen plasma display panel television for the North America market.
Ammari worked at Mitsubishi Consumer Electronics of America for four years as Business Planning Manager where he was responsible for introducing the first flat-screen plasma display panel television for the North America market. He received his Bachelor of Science, Engineering degree and a Master of Business Administration from University of California, Irvine. 13 Table of Contents
We have a dedicated "Green Team" comprised of engineers and environmental regulation experts, that analyze our products, processes, and raw materials to help ensure that we comply with environmental and government regulations worldwide, as well as the applicable "Green" requirements imposed by our customers. Additionally, we have in-house testing capability to help ensure product compliance.
We have a dedicated "Green Team" comprised of engineers and environmental regulation experts, that analyze our products, processes, and raw materials to help ensure that we comply with environmental and government regulations worldwide, as well as the applicable "Green" requirements imposed by our customers. Our factories are certified to the Environmental Management System ISO 14001:2015 standard.
During the years ended December 31, 2024, 2023 and 2022, the costs incurred in complying with federal, state, local and foreign statutes and regulations pertaining to environmental standards and occupational safety and health laws and regulations 10 Table of Contents did not materially affect our earnings, financial condition or competitive position.
We believe that we have materially complied with all currently existing international and domestic federal, state and local statutes and regulations regarding environmental standards and occupational safety and health matters to which we are subject. 9 Table of Contents During the years ended December 31, 2025, 2024 and 2023, the costs incurred in complying with federal, state, local and foreign statutes and regulations pertaining to environmental standards and occupational safety and health laws and regulations did not materially affect our earnings, financial condition or competitive position.
Our mission is to create a user centric, smart home experience through innovative control products that provide the simplest way to interact with technology in the home. We aim to provide universal and interoperable control solutions that automatically set up and deliver consistent and intuitive control of connected devices, content and services.
Our mission is to create products and technologies that help everyday people easily discover and interact with the devices and services in their home. We aim to provide universal and interoperable control solutions that automatically set up and deliver consistent and intuitive control of connected devices, content and services.
Based on the results of these risk assessments, we require that 50% of high-risk suppliers complete an on-site third-party RBA VAP audit. We require suppliers to adhere to our Global Supplier Code of Conduct ("Supplier Code of Conduct"), which is available on our website.
High risk suppliers are required to complete an onsite RBA VAP audit. We require suppliers to adhere to our Global Supplier Code of Conduct ("Supplier Code of Conduct"), which is available on our website.
We place great importance on the compliance with local health and safety laws and regulations. At our manufacturing facilities, we are also committed to protecting our workers from exposure to hazardous substances under an established health and safety management system.
Additionally, we have in-house testing capability to help ensure product compliance. We place great importance on compliance to local health and safety laws and regulations. At our manufacturing facilities, we are also committed to protecting our workers from exposure to hazardous substances following the principles established for the health and safety management system, ISO 45001.
We distribute connected thermostats and home security sensors to pro-security installers and hospitality system integrators in the United States and Europe through a network of national and regional distributors and dealers.
We distribute remote control devices, connected thermostats, integrated circuits ("ICs"), home security sensors and AV accessories directly to video and security service providers and OEMs, both domestically and internationally. We distribute connected thermostats and home security sensors to pro-security installers and hospitality system integrators in the United States and Europe through a network of national and regional distributors and dealers.
Our Human Rights Due Diligence procedure incorporates international labor and human rights standards, as well the RBA Code of Conduct, into our social and ethical management systems. This includes evaluating and addressing human rights concerns in our supply chain. We follow RBA guidelines for the supplier risk assessment process.
Our third party due diligence program and ethics and sustainability management systems are aligned with internationally recognized labor and human rights standards, including the RBA Code of Conduct. This includes evaluating and addressing human rights concerns in our supply chain. We follow RBA guidelines for the supplier risk assessment process.
We hold and apply for patents in the United States and abroad related to our discovery, setup and control technologies across climate control, residential safety and security and smart home automation applications. Our patents have remaining lives ranging from less than one to 18 years.
We maintain a broad portfolio of patents covering our discovery, setup and control technologies across climate control, safety and security, and smart home automation applications. Our patents have remaining lives ranging from less than one year to 18 years.
All of our manufacturing facilities are certified to the ISO 14001:2015 International Standard for environmental management systems. In addition, our manufacturing facilities in Vietnam, Mexico and Yangzhou, PRC have also achieved ISO 45001 International Standard for safety and health management systems. 9 Table of Contents We are focused on reducing the environmental impact of our operations.
In addition, our manufacturing facilities in Vietnam and Yangzhou, PRC have also achieved ISO 45001 International Standard for safety and health management systems. We are focused on reducing the environmental impact of our operations. Our manufacturing facility in Yangzhou, PRC hosts an on-site solar renewable energy system, and we are evaluating the use of renewable energy in other locations.
Our manufacturing facilities are certified to the ISO 9001:2015 International Standard for quality management. Testing and quality control are applied to components, parts, sub-assemblies and systems obtained from third-party suppliers. Our manufacturing facility in Yangzhou, PRC is certified to the TL 9000 Standard, which is the telecom industry's unique extension to ISO 9001:2015.
Our manufacturing facility in Yangzhou, PRC is certified to the TL 9000 Standard, which is the telecom industry's unique 8 Table of Contents extension to ISO 9001:2015. All of our manufacturing facilities are certified to the ISO 14001:2015 International Standard for environmental management systems.
As of the date of this filing, the new tariffs on Mexico goods have been paused; however, significant uncertainty continues to exist about the future of U.S. trade policy and the implementation of new tariffs, including but not limited to, new tariffs on goods manufactured in the PRC and Mexico.
Significant uncertainty continues to exist about the future of U.S. trade policy and the implementation of new tariffs, including but not limited to, new tariffs on goods manufactured in the PRC and Mexico. This includes the 2026 Joint Review of the U.S.-Canada-Mexico Agreement (“USMCA”), which could impact rules of origin and import restrictions on trade with Mexico.
We expect this pattern to be repeated during 2025. Information About Our Executive Officers The following table sets forth certain information concerning our executive officers on March 11, 2025: Name Age Position Paul D. Arling 62 Chairman of the Board and Chief Executive Officer Bryan M. Hackworth 55 Senior Vice President and Chief Financial Officer Ramzi S.
We expect this pattern to be repeated during 2026. Information About Our Executive Officers The following table sets forth certain information concerning our executive officers on March 12, 2026: Name Age Position Richard K. Carnifax 39 Interim Chief Executive Officer and Chief Operating Officer Wade M. Jenke 42 Chief Financial Officer Ramzi S.
Next to these specialized centers of excellence, we employ engineering, sales and marketing and support staff in many of our regional offices in the United States, The Netherlands, Hong Kong, the PRC, Brazil, India, Japan, Korea, Singapore and Mexico.
Next to these specialized centers of excellence, we employ engineering, sales and marketing and support staff in many of our regional offices in the United States, The Netherlands, Hong Kong, the PRC, Brazil, India, Japan, Korea, Singapore and Mexico. 11 Table of Contents Inclusion, Ethics Line and Code of Conduct We are an Equal Opportunity Employer and are committed to providing a workplace free of discrimination, harassment and retaliation for all employees and we value equality, opportunity and respect.
Development Ltd., established in Hong Kong; • CG Mexico Distribution Co., S. de R.L. de C.V., established in Mexico; • CG Mexico Remote Controls, S. de R.L. de C.V., established in Mexico; • Ecolink Intelligent Technology, Inc.; established under the laws of Delaware; • Enson Assets Ltd., established in the British Virgin Islands; • Gemstar Polyfirst Ltd., established in Hong Kong; • Gemstar Technology (Qinzhou) Co.
Our 24 domestic and international subsidiaries are the following: • C.G. Development Ltd., established in Hong Kong; 6 Table of Contents • CG Mexico Distribution Co., S. de R.L. de C.V., established in Mexico; • CG Mexico Remote Controls, S. de R.L. de C.V., established in Mexico; • Gemstar Polyfirst Ltd., established in Hong Kong; • Gemstar Technology (Yangzhou) Co.
Extensive engineering resources were directed at completing the development and testing of our UEI TIDE family of products, including development and sales support to secure design wins across our HVAC OEM, multi-dwelling unit (MDU) and utilities customers.
Our engineering resources continued to advance the UEI TIDE family of smart thermostat platforms, completing development and testing activities to support design wins across HVAC OEM, MDU and utilities customers, and integrating new capabilities showcased at CES 2026, including Matter support, QuickSet homeSense, energy insights and a device-based rules engine.
Our manufacturing process consists of plastic injection molding, keypad molding, coating or painting, surface mount technology, assembly, software programming, functional testing, packaging, and quality control. We conduct operations utilizing a formal, documented quality management system to ensure that our products and services satisfy customer needs and expectations.
We had one supplier, Qorvo, that represented 10.2% of our inventory purchases in 2025. We did not have any suppliers that represented over 10% of our inventory purchases in 2024 or 2023. Our manufacturing process consists of plastic injection molding, keypad molding, coating or painting, surface mount technology, assembly, software programming, functional testing, packaging, and quality control.
Our product and technology offerings include: • Home Entertainment Products: Our industry-leading portfolio includes radio frequency ("RF") capable, voice-enabled universal remote control products; low-power RF and energy-harvesting microcontrollers, as well as, embedded and Cloud software for AV and smart home device and content discovery and control.
Our home entertainment portfolio includes RF‑capable, voice‑enabled remote controls; low‑power microcontrollers; and embedded and cloud‑based software for audio‑video and smart device discovery and control. These solutions are sold to video service providers and consumer electronics OEMs.
For the years ended December 31, 2024, 2023 and 2022, our sales to Daikin Industries Ltd. accounted for 13.3%, 14.0% and 14.4% of our net sales, respectively. For the year ended December 31, 2022, our sales to Comcast Corporation accounted for 14.0% of our net sales.
For the years ended December 31, 2025, 2024 and 2023, our sales to Daikin Industries Ltd. accounted for 18.3%, 13.3% and 14.0% of our net sales, respectively. Products and Technology QuickSet® and QuickSet Cloud. QuickSet is deployed globally in hundreds of millions of devices and enables cross‑protocol interoperability across IR, HDMI‑CEC, Bluetooth LE, Zigbee, Thread, Matter and IP networks.
This focus is driven by the growing demand for energy-efficient and smart climate control solutions in both residential and commercial applications. 3 Table of Contents We serve a diverse range of markets, including consumer electronics, video services, climate control, security, home automation and hospitality.
Our intellectual property includes patented discovery, setup and control technologies deployed across entertainment, climate control and smart home ecosystems. 4 Table of Contents Our overall business strategy is focused on expanding our presence in the climate control market. This focus is driven by the growing demand for energy-efficient and smart climate control solutions in both residential and commercial applications.
He received his Bachelor of Science, Engineering degree in 1989 and, subsequently, a Master of Business Administration from University of California, Irvine in 1993. Richard K. Carnifax is our Senior Vice President, Global Operations. He joined us in May 2020 as Vice President, Global Supply Chain and in July 2022, he was promoted to Vice President, Operations.
Ammari 60 Senior Vice President, Corporate Planning and Strategy Richard K. Carnifax has served as our Interim Chief Executive Officer since July 2025 and Chief Operating Officer since February 2023. He joined us in May 2020 as Vice President, Global Supply Chain and in July 2022, he was promoted to Vice President, Operations.
Additionally, we maintain libraries of proprietary software protocols used by many of the leading HVAC OEM brands worldwide that enable bi-directional communication of control and diagnostic data for efficient and optimized HVAC system operation. We have developed a broad portfolio of patented technologies and the industry's leading database of device and content discovery, setup and control software.
We also maintain proprietary bi-directional communication protocols used by leading HVAC OEMs to enable optimized control and access to diagnostic system data. We integrate our software and control libraries into the integrated circuits we ship to manufacturers, and we also license these technologies directly to OEMs and service providers.
We have also obtained copyright registration and claim copyright protection for certain proprietary software and libraries of our device control libraries. Additionally, the names of many of our products are registered, or are being registered, as trademarks in the United States Patent and Trademark Office and in most of the other countries in which such products are sold.
We also hold copyrights on proprietary software and device control libraries and maintain registered trademarks for many of our product names in the United States and internationally. In certain cases, we rely on common law trade secret protection when appropriate. Manufacturing and Supply We are vertically integrated across design, development, and manufacturing.
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These solutions are sold primarily to video service providers and consumer electronics original equipment manufacturer ("OEM") customers.
Added
Our product and technology offerings include: • Connected Home: ▪ Climate Control Solutions. We offer a portfolio of wireless and wired thermostat controllers, smart thermostats and connected accessories sold primarily to HVAC original equipment manufacturers (“OEMs”), utilities, hospitality and multi‑dwelling unit (“MDU”) system integrators.
Removed
We also distribute a broad portfolio of replacement remote controls, powerful free-to-air antennae and television and soundbar wall mounts direct to retailers worldwide under the One For All ® brand. • Climate Control Solutions: Our innovative climate control solutions include wall-mounted and handheld thermostat controllers and connected accessories for smart energy management systems.
Added
Our UEI TIDE™ family integrates Wi‑Fi, Bluetooth® Low Energy, Zigbee® and Matter, as well as advanced sensing for temperature, humidity, proximity, occupancy and carbon dioxide. The platform supports intelligent energy management and comfort features enabled by QuickSet® homeSense, our privacy‑first software‑defined occupancy and presence detection technology. ▪ Smart Home and Security.
Removed
These products are primarily sold to OEM customers, as well as hotels, hospitality and system integrators.
Added
We provide radio‑frequency sensors and control modules for residential security, safety and home automation applications. These products support major standards, including Zigbee, Z‑Wave and sub‑GHz proprietary protocols, and are sold to OEMs, service providers and professional security channel partners. • Home Entertainment: ▪ Home Entertainment Products.
Removed
Our UEI TIDE family of climate control solutions feature advanced technologies such as Wi-Fi, BLE, Zigbee and Matter, along with sensors for temperature, humidity, proximity, occupancy and carbon dioxide sensing. • Smart Home and Security Products: We offer proprietary and standards-based RF sensors designed for residential security, safety and home automation applications.
Added
In retail, our One For All® brand offers replacement remotes, antennas, mounting solutions, as well as home office and gaming furniture and accessories in key global markets. ▪ Software and Cloud Services. We license our technology and software solutions—including QuickSet®, QuickSet Cloud and lifecycle device‑management services—to OEMs, video service providers and consumer electronics brands.
Removed
Our integrated circuits, on which our software and universal control database is embedded, are sold primarily to OEMs, video service providers, smart home dealers and private label customers. • Software and Cloud Services: Our software, firmware and technology solutions enable devices such as smart TVs, hybrid set-top boxes, audio systems, smart speakers, game consoles and other consumer electronic and smart home devices to wirelessly connect and interoperate within home networks.
Added
These services support interoperability, app and content discovery, diagnostics, secure firmware updates and data‑driven personalization. ▪ Intellectual Property and Licensing. We license our device knowledge libraries, embedded firmware and cloud‑based services to customers worldwide.
Removed
These solutions support control and delivery of home entertainment application services and content, smart home services and device or system information. New features include private, on-premise user presence and occupancy detection to enhance user experiences with their connected devices. • Intellectual Property and Licensing: We license our intellectual property primarily to OEMs and video service providers.
Added
In consumer electronics, we consider Samsung Electronics Co., Sony Group Corporation, Vizio and LG Electronics as long-term accounts that represent a significant share of their industry.
Removed
Our cloud-enabled software provides reliable firmware update provisioning and digital rights management validation services to major consumer electronics brands. We offer regular control library database and software updates to our licensing customers to ensure their systems are compatible with the latest devices entering the home.
Added
In cable video services, Comcast Corporation, Charter, Cox Communications, Liberty Global and Vodafone Group rank amongst the largest video service providers in their respective markets; and in satellite services, Dish Network Corporation, Sky plc, Bharti Airtel Limited and DIRECTV represent the majority of global service providers.
Removed
Over the past few years, our strategic focus has been towards expanding our presence in the climate control market.
Added
As part of our channel diversification strategy, we are also expanding our connected home growth strategy beyond core HVAC OEM offerings, entering adjacent markets such as utilities and multi-dwelling unit property management, while also increasing our presence in the security channel.
Removed
Distribution methods for our control solutions vary depending on the sales channel. We distribute remote control devices, connected thermostats, integrated circuits ("ICs"), home security sensors and AV accessories directly to video and security service providers and OEMs, both domestically and internationally.
Added
Energy management is a growing priority in Western Europe -- to meet this demand, we are enhancing Tide Touch with new features that support energy efficiency and provide utilities with actionable insights. We are applying a similar approach to serve multi-dwelling unit property managers.
Removed
Products and Technology Our flagship product, QuickSet ® ("QuickSet") is a software solution that is primarily delivered as a cloud-based service, but is also embedded in many entertainment and smart home platforms worldwide, to enable universal device and content discovery system setup, device interoperability and system control.
Added
By integrating interoperability with smart devices such as door locks and water leak detectors, Tide Touch offers a turnkey solution, delivering energy efficiency, convenience and remote management capabilities while reducing the risk of costly failures. Distribution methods for our control solutions vary depending on the sales channel.
Removed
QuickSet and QuickSet Cloud utilize data transmitted over various communication protocols including HDMI, low power RF (such as Bluetooth or Zigbee, including Zigbee 3.0 and Zigbee RF4CE), Thread, Matter, Internet Protocol ("IP"), Consumer Electronics Control ("CEC") and infrared to detect various attributes of connected devices, including services (apps), content history and whole home audio.
Added
QuickSet Cloud extends device identification, app/content discovery, AI‑assisted feature enablement and lifecycle device support. QuickSet homeSense™. QuickSet homeSense enhances the platform with contextual intelligence that enables adaptive climate control, presence‑based entertainment features and privacy‑first occupancy detection. QuickSet is a certified Matter controller with multi‑admin capabilities. Edge Connectivity Modules.
Removed
They enable user access and control across all their smart, connected devices as well as their legacy (non-connected) devices enhancing the user's experience across their smart home landscape.
Added
QuickSet Widget and QuickSet Widget Pro provide Wi‑Fi 6, Bluetooth 5.3, Zigbee and Thread connectivity with native Matter support. These modules integrate seamlessly with cloud services to accelerate OEM development and simplify deployment. UEI Virtual Agent and NetReady support provide automated device onboarding, diagnostics and troubleshooting. TIDE™ Climate Control Platforms.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThese conflicts and the resulting sanctions and related countermeasures could lead to market disruptions, including significant volatility in commodity prices, credit and capital markets, and supply chain interruptions. Additionally, they have the potential to spread to or exacerbate tensions in other countries or regions, leading to new and unanticipated disruptions.
Biggest changeAmong other events, international conflicts have led to disruption of international shipping lanes, causing shipping delays and fluctuating freight costs. These conflicts and the resulting sanctions and related countermeasures could lead to market disruptions, including significant volatility in commodity prices, credit and capital markets, and supply chain interruptions.
Artificial Intelligence We incorporate artificial intelligence ("AI") solutions into some of our platforms, offerings, services and features, and these applications may become more important in our operations over time.
Artificial Intelligence We may incorporate AI solutions into some of our platforms, offerings, services and features, and these applications may become more important in our operations over time.
These development cycles include initial longer customer engagement upfront to define new product requirements as well as extensive testing and validation of thermostat control and performance against legacy and new HVAC equipment at the end.
These development cycles include initial longer customer engagement upfront to define new product requirements as well as extensive testing and validation of thermostat control and performance against legacy and new HVAC equipment at the end of development.
We presently operate factories in the PRC, Vietnam, Mexico and Brazil, engineering centers in India, Japan and Korea and rely on third-party manufacturers located in Asia.
We presently operate factories in the PRC, Vietnam and Brazil, engineering centers in India, Japan and Korea and rely on third-party manufacturers located in Asia and Mexico.
We have and may continue to strategically purchase ICs and other key components in advance of demand to take advantage of favorable pricing or to address concerns about future availability. If we fail to anticipate customer demand properly or if customer changes its demand significantly, a temporary "oversupply" could result in excess or obsolete components.
We have strategically purchased and may continue to strategically purchase ICs and other key components in advance of demand to take advantage of favorable pricing or to address concerns about future availability. If we fail to anticipate customer demand properly or if customer changes its demand significantly, a temporary "oversupply" could result in excess or obsolete components.
These challenges include: (1) compliance with complex and changing laws, regulations and policies of governments that may impact our operations, such as foreign ownership restrictions, import and export controls, tariffs, and trade restrictions; (2) compliance with U.S. and foreign laws that affect the activities of companies abroad, such as anti-corruption laws, competition laws, currency regulations, and laws affecting dealings with certain nations; (3) limitations on our ability to repatriate non-U.S. earnings in a tax effective manner; (4) the difficulties involved in managing an organization doing business in many different countries; (5) uncertainties as to the enforceability of contract and intellectual property rights under local laws; (6) rapid changes in government policy, political or civil unrest, acts of terrorism, or the threat of international boycotts or U.S. anti-boycott legislation; and (7) currency exchange rate fluctuations.
These challenges include: (1) compliance with complex and changing laws, regulations and policies of governments that may impact our operations, such as foreign ownership restrictions, import and export controls, tariffs, and trade restrictions; (2) compliance with U.S. and foreign laws that affect the activities of companies abroad, such as anti-corruption laws, competition laws, currency regulations, and laws affecting dealings with certain nations; (3) limitations on our ability to repatriate non-U.S. earnings in a tax effective manner; (4) the difficulties involved in managing 24 Table of Contents an organization doing business in many different countries; (5) uncertainties as to the enforceability of contract and intellectual property rights under local laws; (6) rapid changes in government policy, political or civil unrest, acts of terrorism, or the threat of international boycotts or U.S. anti-boycott legislation; and (7) currency exchange rate fluctuations.
While we do not authorize the sourcing of any product from the XUAR and have increased actions to ensure our entire supply chain is free of any products made with forced labor, there is nonetheless a risk, particularly in light of prior media allegations and government inquiries focusing on one of our former facilities, that our business, results of operations and financial condition could be adversely affected by the UFLPA, related regulatory requirements and enforcement activity, or related customer concerns.
While we do not authorize the sourcing of any product from the XUAR and have increased compliance to ensure our entire supply chain is free of any products made with forced labor, there is nonetheless a risk, particularly in light of prior media allegations and government inquiries focusing on one of our former facilities, that our business, results of operations and financial condition could be adversely affected by the UFLPA, related regulatory requirements and enforcement activity, or related customer concerns.
If our ESG practices do not meet evolving investor or other stakeholder expectations and standards, then our reputation or our attractiveness as an investment, business partner, service provider or employer could be negatively impacted.
If our practices do not meet evolving investor or other stakeholder expectations and standards, then our reputation or our attractiveness as an investment, business partner, service provider or employer could be negatively impacted.
Our failure to adequately update, accomplish or accurately track and report on these goals on a timely basis, or at all, could adversely affect our reputation, financial performance and growth and expose us to increased scrutiny from the investment community, special interest groups and enforcement authorities. Standards for tracking and reporting ESG matters continue to evolve.
Our failure to adequately update, accomplish or accurately track and report on these goals on a timely basis, or at all, could adversely affect our reputation, financial performance and growth and expose us to increased scrutiny from the investment community, special interest groups and enforcement authorities. Standards for tracking and reporting such matters continue to evolve.
Such conditions in the United States and worldwide may impact our business due to weak economic conditions, changes in energy prices and currency values, political instability, heightened travel security measures, advisories, or disruptions, and concerns over disease, violence, war, or terrorism may reduce the demand for some of our products and impair the ability of those with whom we do business to satisfy their obligations to us, each of which could adversely affect our results of operations, cash flow, liquidity or financial condition.
Such conditions in the United States and worldwide may impact our business due to weak economic conditions, changes in energy prices and currency values, political instability, heightened travel security measures, advisories, or disruptions, and concerns over disease, violence, war, or 28 Table of Contents terrorism may reduce the demand for some of our products and impair the ability of those with whom we do business to satisfy their obligations to us, each of which could adversely affect our results of operations, cash flow, liquidity or financial condition.
Also, we are continuing to experience increases in freight costs which have and may continue to adversely affect our margins. At the same time, in order to secure components for our products or services, we have and may continue to make advance payments to suppliers and/or enter into non-cancelable commitments with suppliers.
Also, we are continuing to experience increases in freight costs which have adversely affected and may continue to adversely affect our margins. At the same time, in order to secure components for our products or services, we have made and may continue to make advance payments to suppliers and/or enter into non-cancelable commitments with suppliers.
Except for Universal Electronics BV, which has guaranteed the performance under our Credit Line, our subsidiaries are separate and distinct legal entities and have no obligation to pay any amounts due on our debt or to provide us with funds to meet our cash flow needs.
Except for Universal Electronics BV, which has guaranteed the performance under our U.S. Credit Line, our subsidiaries are separate and distinct legal entities and have no obligation to pay any amounts due on our debt or to provide us with funds to meet our cash flow needs.
Importers are required to present clear and convincing evidence that goods from the XUAR are not made with forced labor.
Importers that source from the XUAR are required to present clear and convincing evidence that goods from the XUAR are not made with forced labor.
Our processes and controls for reporting ESG matters relating to our operations and supply chain are evolving along with various standards for identifying, measuring, and reporting ESG metrics, including ESG related disclosures that may be required by the SEC, European and other regulators, and such standards may change over time.
Our processes and controls for reporting these matters relating to our operations and supply chain are evolving along with various standards for identifying, measuring, and reporting such metrics, including related disclosures that may be required by the SEC, European and other regulators, and such standards may change over time.
So called "Acts of God," such as hurricanes, earthquakes, tsunamis, floods, volcanic activity, wildfires, and other natural disasters, as well as man-made disasters and the spread of contagious diseases in locations where we lease and/or own properties and equipment or manage our business, and these circumstances could continue or worsen in the future to an extent and for durations that we are not able to predict.
So called “Acts of God,” such as hurricanes, earthquakes, tsunamis, floods, volcanic activity, wildfires, and other natural disasters, as well as man-made disasters and the spread of contagious diseases in locations where we lease and/or own properties and equipment or manage our business, and these circumstances could continue or worsen in the future to an extent and for durations that we are not able to predict.
In addition to the other risks identified herein, doing business in the PRC carries a number of risks including the following: 20 Table of Contents The Fluctuation of the Chinese Yuan Renminbi May Adversely Impact Our Manufacturing Costs Under Chinese monetary policy, the Chinese Yuan Renminbi is permitted to fluctuate within a managed band against a basket of certain foreign currencies and has resulted in increased volatility in the exchange rate of the Chinese Yuan Renminbi against the U.S.
In addition to the other risks identified herein, doing business in the PRC carries a number of risks including the following: The Fluctuation of the Chinese Yuan Renminbi May Adversely Impact Our Manufacturing Costs Under Chinese monetary policy, the Chinese Yuan Renminbi is permitted to fluctuate within a managed band against a basket of certain foreign currencies and has resulted in increased volatility in the exchange rate of the Chinese Yuan Renminbi against the U.S.
In addition, our officers and directors periodically sell shares of our common stock which they own, many times pursuant to trading plans established under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended (the "Exchange Act").
In addition, our officers and directors periodically sell shares of our common stock which they own, many times pursuant to trading plans established under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
Regulations Related to the Use of Conflict-Free Minerals May Increase Our Costs and Expenses, and an Inability to Certify that Our Products are Conflict-Free May Adversely Affect Customer Relationships The Dodd-Frank Wall Street Reform and Consumer Protection Act contains provisions to improve the transparency and accountability of the use by public companies in their products of minerals mined in certain countries and to prevent the sourcing of such "conflict" minerals.
Regulations Related to the Use of Conflict-Free Minerals May Increase Our Costs and Expenses, and an Inability to Certify that Our Products are Conflict-Free May Adversely Affect Customer Relationships The Dodd-Frank Wall Street Reform and Consumer Protection Act contains provisions to improve the transparency and accountability of the use by public companies in their products of minerals mined in certain countries and to prevent the 26 Table of Contents sourcing of such "conflict" minerals.
Disruptions Caused by Labor Disputes or Organized Labor Activities Could Materially Harm our Business and Reputation Currently, approximately 500 of our Brazil and Mexico employees are represented by labor unions. Additionally, approximately 600 of our Vietnam employees are covered by a collective bargaining agreement.
Disruptions Caused by Labor Disputes or Organized Labor Activities Could Materially Harm our Business and Reputation Currently, approximately 200 of our Brazil and Mexico employees are represented by labor unions. Additionally, approximately 600 of our Vietnam employees are covered by a collective bargaining agreement.
These investigations, examinations and other proceedings may subject us to significant liability and require us to pay significant settlements, fines and penalties, which may have a material adverse effect on our results of operations, cash flows or financial condition. Patents, Trademarks, and Copyrights We have numerous patents, trade secrets, trademarks, trade names, and know-how that are valuable to our business.
These investigations, examinations and other proceedings may subject us to significant liability and require us to pay significant settlements, fines and penalties, which may have a material adverse effect on our results of operations, cash flows or financial condition. 25 Table of Contents Patents, Trademarks, and Copyrights We have numerous patents, trade secrets, trademarks, trade names, and know-how that are valuable to our business.
Further, changes in the laws of foreign jurisdictions in which we operate may adversely affect the ability of some of our foreign subsidiaries to repatriate funds to us. 26 Table of Contents We may also fund a portion of our seasonal working capital needs and obtain funding for other general corporate purposes through short-term borrowings backed by our revolving credit facilities.
Further, changes in the laws of foreign jurisdictions in which we operate may adversely affect the ability of some of our foreign subsidiaries to repatriate funds to us. We may also fund a portion of our seasonal working capital needs and obtain funding for other general corporate purposes through short-term borrowings backed by our revolving credit facilities.
Methodologies for reporting ESG data may be updated and previously reported ESG data may be adjusted to reflect improvement in availability and quality of third-party data, changing assumptions, changes in the nature and scope of our operations and other changes in circumstances.
Methodologies for reporting such data may be updated and previously reported data may be adjusted to reflect improvement in availability and quality of third-party data, changing assumptions, changes in the nature and scope of our operations and other changes in circumstances.
We and third parties who provide services to us also maintain personally identifiable information about our employees. The integrity and protection of that customer, employee, and company data, including proprietary information, is critical to us. If that data is inaccurate or incomplete or inaccessible, we may make faulty decisions or experience business interruptions.
We and third parties who provide services to us also maintain personally identifiable information about our employees. The integrity and protection of that customer, employee, and company data, 17 Table of Contents including proprietary information, is critical to us. If that data is inaccurate or incomplete or inaccessible, we may make faulty decisions or experience business interruptions.
There can be no assurance that we will continue to have adequate staffing or that our development efforts will ultimately be successful. Moreover, certain of our technologies have not been fully tested in 16 Table of Contents commercial use, and it is possible that they may not perform as expected.
There can be no assurance that we will continue to have adequate staffing or that our development efforts will ultimately be successful. Moreover, certain of our technologies have not been fully tested in commercial use, and it is possible that they may not perform as expected.
Any potential sale or divestment would be dependent upon a number of factors that may be beyond our control, including, among other factors, market conditions, industry trends, the interest of third parties in the assets and the availability of financing to potential buyers on reasonable terms.
Any potential sale or divestment would be 22 Table of Contents dependent upon a number of factors that may be beyond our control, including, among other factors, market conditions, industry trends, the interest of third parties in the assets and the availability of financing to potential buyers on reasonable terms.
Some customers may elect to engage a second source to manufacture the same product, and there is no guarantee that these customers will maintain the volume that was initially allocated to us throughout the product life cycle. 19 Table of Contents Smart control solutions in the HVAC market tend to have long development lead-times, ranging from 12-24 months depending on product complexity.
Some customers may elect to engage a second source to manufacture the same product, and there is no guarantee that these customers will maintain the volume that was initially allocated to us throughout the product life cycle. Smart control solutions in the HVAC market tend to have long development lead-times, ranging from 12-24 months depending on product complexity.
Certain stakeholders may have different views on where our focus on ESG matters should be placed, including different views of regulators in the various jurisdictions in which we operate.
Certain stakeholders may have different views on where our focus on such matters should be placed, including different views of regulators in the various jurisdictions in which we operate.
Ultimately, the impacts of climate change, whether involving physical risks or transition risks are expected to be widespread and unpredictable and may materially adversely affect our business and financial results. 21 Table of Contents Significant Developments From Potential Changes in U.S.
Ultimately, the impacts of climate change, whether involving physical risks or transition risks, are expected to be widespread and unpredictable and may materially adversely affect our business and financial results. Significant Developments From Potential Changes in U.S.
Because of technological changes in the 23 Table of Contents wireless and home control industry, current extensive patent coverage, and the rapid rate of issuance of new patents, it is possible certain components of our products and business methods may unknowingly infringe upon the patents of others.
Because of technological changes in the wireless and home control industry, current extensive patent coverage, and the rapid rate of issuance of new patents, it is possible certain components of our products and business methods may unknowingly infringe upon the patents of others.
Most of the components used in our products are available from multiple sources. However, we purchase ICs used in products, from a small number of key suppliers. To reduce our dependence on our IC suppliers we continually seek additional sources.
Most of the components used in our products are available from multiple sources. 20 Table of Contents However, we purchase ICs used in products, from a small number of key suppliers. To reduce our dependence on our IC suppliers we continually seek additional sources.
In recent years, some raw material and energy prices have increased, particularly silicon and plastic packaging. 28 Table of Contents The cost of raw materials and energy has in the past experienced, and likely will in the future continue to experience, periods of volatility.
In recent years, some raw material and energy prices have increased, particularly silicon and plastic packaging. The cost of raw materials and energy has in the past experienced, and likely will in the future continue to experience, periods of volatility.
The use of AI applications has resulted in, and may in the future result in, cybersecurity incidents that implicate the personal data of end users of such applications. Any such cybersecurity incidents related to our use of AI applications could adversely affect our reputation and results of operations.
The use of AI applications may result in cybersecurity incidents that implicate the personal data of end users of such applications. Any such cybersecurity incidents related to our use of AI applications could adversely affect our reputation and results of operations.
Adverse changes in global, national, regional economies, governmental policies (including in areas such as trade, travel, immigration, healthcare, and related issues), and geopolitical conditions (such as the Russian invasion of Ukraine, conflict in the Middle East, tension across the Taiwan Strait and tension between the United States and the PRC, Mexico and Canada, and the ramifications of those and other events) impact our activities.
Adverse changes in global, national, regional economies, governmental policies (including in areas such as trade, travel, immigration, healthcare, and related issues), and geopolitical conditions (such as the Russian invasion of Ukraine, conflict in the Middle East, tension across the Taiwan Strait and tension between the United States and foreign countries, and the ramifications of those and other events) impact our activities.
As the labor laws, social insurance and wage levels continue to grow and the workers become more sophisticated, our costs to employ these and other workers in the PRC may grow beyond that anticipated by management.
As the labor laws, social insurance and wage levels continue to grow, our costs to employ these and other workers in the PRC may grow beyond that anticipated by management.
ITEM 1A. RISK FACTORS Forward-Looking Statements We make forward-looking statements in Management's Discussion and Analysis of Financial Condition and Results of Operations and elsewhere in this report based on the beliefs and assumptions of our management and on information currently available to us.
ITEM 1A. RISK FACTORS Forward-Looking Statements We make forward-looking statements in Management's Discussion and Analysis of Financial Condition and Results of Operations and elsewhere in this Annual Report on Form 10-K based on the beliefs and assumptions of our management and on information currently available to us.
Additionally, we, the technology industry and the stock market as a whole have experienced extreme stock price and volume fluctuations that have affected stock prices in ways that may have been unrelated to our and these companies' operating performance.
Additionally, we, the 27 Table of Contents technology industry and the stock market as a whole have experienced extreme stock price and volume fluctuations that have affected stock prices in ways that may have been unrelated to our and these companies’ operating performance.
In addition, these risks could cause results to differ materially from those we express in forward-looking statements contained in this report or in other Company communications, including those we file from time to 14 Table of Contents time with the SEC.
In addition, these risks could cause results to differ materially from those we express in forward-looking statements contained in this report or in other Company communications, including those we file from time to time with the SEC.
As with the effects we previously experienced from the COVID-19 pandemic, any one or more of these events, including the actions taken in the ongoing conflicts in the Middle East and by Russia against Ukraine, could disrupt sales volumes, raw material and fuel supplies and increase our costs, reduce our ability to manufacture and supply our products, and/or increase our operating costs, all of which could adversely affect our earnings or cash flows and profits.
As with the effects we previously experienced from the COVID-19 pandemic, any one or more of these events, including the actions taken in ongoing international conflicts, could disrupt sales volumes, raw material and fuel supplies and increase our costs, reduce our ability to manufacture and supply our products, and/or increase our operating costs, all of which could adversely affect our earnings or cash flows and profits.
The forward-looking statements in this report speak only as of the date of this report, and we undertake no obligation to update or revise any forward-looking statement, whether as a result of new information, future developments, or otherwise.
The forward-looking statements in this report speak only as of the date of this Annual Report on Form 10-K, and we undertake no obligation to update or revise any forward-looking statement, whether as a result of new information, future developments, or otherwise.
One such method is our use of the EcoVadis sustainability rating system. Further, we may amend, abandon or replace our goals related to ESG matters due to a change in strategy, reduced relevance of such goals or changing market conditions and we may take certain actions that 24 Table of Contents stakeholders or regulators view as contrary to such goals.
One such method is our use of the EcoVadis sustainability rating system. Further, we may amend, abandon or replace our goals related to sustainability, human capital, and governance matters due to a change in strategy, reduced relevance of such goals or changing market conditions and we may take certain actions that stakeholders or regulators view as contrary to such goals.
Risks Relating to Finance Growth Projections Management has made projections required for the preparation of financial statements in conformity with accounting principles generally accepted in the United States ("U.S.
Growth Projections Management has made projections required for the preparation of financial statements in conformity with accounting principles generally accepted in the United States ("U.S.
GAAP") regarding future events and the financial performance of the Company, including those involving: • the benefits the Company expects as a result of the development and success of products and technologies, including new products and technologies; • the benefits expected by conducting business in Asian and Latin American markets, without which, we may not be able to recover the costs we incur to enter into such markets; • new contracts with new and existing customers and new market penetrations; • the expected continued adoption of the Company's technologies in home entertainment, specifically universal AV control of connected entertainment devices; • the expected continued growth in digital TVs, DVRs, PVRs and overall growth in the Company's industry; • the impact competitors and OTT providers may have on our business; and • the effects we may experience due to current global and regional economic conditions.
GAAP") regarding future events and the financial performance of the Company, including those involving: • the benefits the Company expects as a result of the development and success of products and technologies, including new products and technologies; • the benefits expected by conducting business in Asian and Latin American markets, without which, we may not be able to recover the costs we incur to enter into such markets; • new contracts with new and existing customers and new market penetrations; • the expected continued adoption of the Company's technologies in home entertainment, specifically universal AV control of connected entertainment devices; • the expected continued growth in connected home, digital TVs, DVRs, PVRs and overall growth in the Company's industry; • the impact competitors and OTT providers may have on our business; and • the effects we may experience due to current global and regional economic conditions. 15 Table of Contents Actual events or results may be unfavorable to management's projections, which may have a material adverse effect on our projected operating results, financial condition and cash flows.
In addition, we develop and maintain our own database of IR and RF codes, as well as elements critical to the delivery of our HVAC engine. There are other IR and RF libraries offered by companies that we compete with in the marketplace.
Other control technologies exist or may be developed that may compete with our technology. In addition, we develop and maintain our own database of IR and RF codes, as well as elements critical to the delivery of our HVAC engine. There are other IR and RF libraries offered by companies that we compete with in the marketplace.
Rising oil prices may have an adverse effect on cost of sales and operating expenses, and Russia's invasion of Ukraine may continue to create uncertainty in oil prices. Conflict in the Middle East may produce continued or increased disruptions to international shipping and fluctuating freight costs.
Rising oil prices may have an adverse effect on cost of sales and operating expenses, and international conflicts may continue to create uncertainty in oil prices and may produce continued or increased disruptions to international shipping and fluctuating freight costs.
We rely on software applications, enterprise cloud storage systems and cloud computing services provided by third-party vendors, and our business may be adversely affected by service disruptions in or cybersecurity incidents and disruptions and failures related to such systems.
We rely on software applications, enterprise cloud storage systems and cloud computing services provided by third-party vendors, and our business may be adversely affected by service disruptions in or cybersecurity incidents and disruptions and failures related to such systems. Remote work and remote access also increases the risk of cybersecurity incidents and disruptions and failures on our systems surface.
In addition, under the Second Amended and Restated Credit Agreement ("Second Amended Credit Agreement") with U.S. Bank National Association ("U.S. Bank"), we may elect to pay interest on the revolving line of credit ("U.S. Credit Line") based on the Secured Overnight Financing Rate ("SOFR") plus an applicable margin or a base rate (based on the prime rate of U.S.
Bank, we may elect to pay interest on the revolving line of credit ("U.S. Credit Line") based on the Secured Overnight Financing Rate ("SOFR") plus an applicable margin or a base rate (based on the prime rate of U.S. Bank or as otherwise specified in the Second Amended Credit Agreement), plus an applicable margin.
These hedging agreements also do not cover all currencies in which we do business, do not eliminate foreign currency risk entirely for the currencies that they do cover, and involve costs and risks of their own in the form of transaction costs, credit requirements and counterparty risk.
These hedging agreements also do not cover all currencies in which we do business, do not eliminate foreign currency risk entirely for the currencies that they do cover, and involve costs and risks of their own in the form of transaction costs, credit requirements and counterparty risk. 16 Table of Contents In addition, under the Second Amended Credit Agreement with U.S.
Bank or as otherwise specified in the Second Amended Credit Agreement), plus an applicable margin. Further, under our Line of Credit Agreement (the "Line of Credit Agreement") with the Bank of China, we pay interest on the provided line of credit ("China Credit Line") based on the one-year rate from the National Interbank Funding Center less a margin.
Further, under our Line of Credit Agreement (the "Line of Credit Agreement") with the Bank of China, we pay interest on the provided line of credit ("China Credit Line") based on the one-year rate from the National Interbank Funding Center less a margin.
Potential Fluctuations in Quarterly Results We may from time to time increase our operating expenses to fund greater levels of R&D, sales and marketing activities, development of new distribution channels, improvements in our operational and financial systems, moving manufacturing capabilities to other countries, and development of our customer support capabilities, In addition, legal expenses could increase from time to time as we enhance or increase our litigation efforts and/or to support our efforts to comply with or respond to various government regulations and investigations.
Potential Fluctuations in Quarterly Results We may from time to time increase our operating expenses to fund greater levels of R&D, sales and marketing activities, development of new distribution channels, improvements in our operational and financial systems, moving manufacturing capabilities to other locations or countries, and/or development of our customer support capabilities.
The Prominence and Evolution on Disclosures related to Environmental, Social and Governance ("ESG") Matters May Expose Us to Certain Performance and Reputational Risks We have established certain goals related to ESG matters and the reporting of ESG data.
The Prominence and Evolution on Disclosures related to Sustainability, Human Capital, and Governance and Other Corporate Responsibility Matters May Expose Us to Certain Performance and Reputational Risks We have established certain goals related to sustainability, human capital, and governance matters and the reporting of such data.
We also supply our products, accessory products, and technologies to our wholly owned, non-U.S. subsidiaries and to independent foreign distributors, who in turn distribute our products worldwide.
We sell our products, accessory products, and proprietary technologies to video service providers, OEMs, retailers and private label customers. We also supply our products, accessory products, and technologies to our wholly owned, non-U.S. subsidiaries and to independent foreign distributors, who in turn distribute our products worldwide.
Our Governing Corporate Documents Contain, and Our Board of Directors May Implement, Antitakeover Provisions that May Deter Takeover Attempts Our governing corporate documents, among other things, require super-majority votes in connection with certain mergers and similar transactions.
Our Governing Corporate Documents Contain, and Our Board May Implement, Antitakeover Provisions that May Deter Takeover Attempts Our governing corporate documents, among other things, require super-majority votes in connection with certain mergers and similar transactions. In addition, our Board may, without stockholder approval, implement other anti-takeover defenses, such as a stockholder's rights plan.
The domestic and international legal and regulatory environment related to information security, data collection and privacy is increasingly rigorous and complex, with new and constantly changing requirements applicable to our business. 15 Table of Contents Compliance with these requirements, including the European Union's General Data Protection Regulation ("GDPR"), China's newly enacted Personal Information Protection Law ("PIPL") and other domestic (including state law) and international regulations, could result in additional costs and changes to our business practices.
Compliance with these requirements, including the European Union's General Data Protection Regulation ("GDPR"), China's newly enacted Personal Information Protection Law ("PIPL") and other domestic (including state law) and international regulations, could result in additional costs and changes to our business practices.
We continually review our service and support group and are marketing our expertise in this area to other potential retail customers. Manufacturing Risks We operate factories in the PRC, Vietnam, Mexico and Brazil. In addition, we utilize third-party manufacturers located in Asia to manufacture a portion of our products.
Manufacturing Risks We operate factories in the PRC, Vietnam and Brazil. In addition, we utilize third-party manufacturers located in Asia and Mexico to manufacture a portion of our products.
We compete with a variety of entities, some of which have greater financial resources. Other competitors are smaller and may be able to offer more specialized products.
Our competition is fragmented across our products, and, accordingly, we do not compete with any one company across all product lines. We compete with a variety of entities, some of which have greater financial resources. Other competitors are smaller and may be able to offer more specialized products.
We assess these assets for impairment whenever events or changes in circumstances indicate that the fair value may be below its carrying value.
Additionally, we have long-lived and intangible assets recorded on our consolidated balance sheet. We assess these assets for impairment whenever events or changes in circumstances indicate that the fair value may be below its carrying value.
There can be no assurance that these tariffs will not be implemented or increased in the future, with the previously mentioned countries or additional countries with which we do business.
The measures by the administration may increase costs for certain goods imported into the United States, and there can be no assurance that these tariffs will not be implemented or increased in the future, with the previously mentioned countries or additional countries with which we do business.
In addition, our Board of Directors may, without stockholder approval, implement other anti-takeover defenses, such as a stockholder's rights plan. 27 Table of Contents General Risks Economic Downturns and Other Global, National, and Regional Conditions May Adversely Affect Our Results of Operations, Cash Flow, Liquidity or Financial Condition Because we conduct our business on a global platform, our business is sensitive to global and regional business and economic conditions.
General Risks Economic Downturns and Other Global, National, and Regional Conditions May Adversely Affect Our Results of Operations, Cash Flow, Liquidity or Financial Condition Because we conduct our business on a global platform, our business is sensitive to global and regional business and economic conditions.
Global markets continued to face threats and uncertain economic and financial market conditions that may also adversely affect the financial condition of our customers, suppliers and other business partners.
Additionally, they have the potential to spread to or exacerbate tensions in other countries or regions, leading to new and unanticipated disruptions. Global markets continued to face threats and uncertain economic and financial market conditions that may also adversely affect the financial condition of our customers, suppliers and other business partners.
We can give no assurance that we will enter into new or renewal leases, or that, if entered into, the new lease terms will be similar to the existing terms or that the terms of any such new or renewal leases will not have a significant and material adverse effect on our operating results, financial condition and cash flows.
We can give no assurance that we will enter into new or renewal leases, or that, if entered into, the new lease terms will be similar to the existing terms or that the terms of any such new or renewal leases will not have a significant and material adverse effect on our operating results, financial condition and cash flows. 21 Table of Contents Competition Competition within the industries we serve is based primarily on product availability, price, speed of delivery, ability to tailor specific solutions to customer needs, quality, and depth of product lines.
An inability to cure or repair such a defect may result in the failure of a product line, temporary or permanent withdrawal of a product or market, damage to our reputation, increased inventory costs, or product re-engineering expenses, any of which may have a material impact on our operating results, financial condition and cash flows.
An inability to cure or repair such a defect may result in the failure of a product line, temporary or permanent withdrawal of a product or market, damage to our reputation, increased inventory costs, or product re-engineering expenses, any of which may have a material impact on our operating results, financial condition and cash flows. 18 Table of Contents Technology Changes in Control and Sensing We currently derive substantial revenue from the sale of remote controls, thermostats, sensors and home automation products based on IR and RF and other technologies.
Certain of our products have more features than others and therefore require more end-user technical support, which may increase our support costs and have an adverse effect on our business, operating results, financial condition and cash 17 Table of Contents flows.
Certain of our products have more features than others and therefore require more end-user technical support, which may increase our support costs and have an adverse effect on our business, operating results, financial condition and cash flows. We continually review our service and support group and are marketing our expertise in this area to other potential retail customers.
Risks Relating to Regulation and Legal Matters Certain Regulatory and Financial Risks Related to Climate Change Growing concerns about climate change may result in the imposition of additional regulations or restrictions to which we may become subject.
In addition, the promulgation of new laws, changes to existing laws and the preemption of local regulations by national laws may adversely affect foreign investors. 23 Table of Contents Risks Relating to Regulation and Legal Matters Certain Regulatory and Financial Risks Related to Climate Change Concerns about climate change may result in the imposition of additional regulations or restrictions to which we may become subject.
The loss of, deterioration of our relationship with, or limits in allocation by, a single-source supplier, could adversely affect our business and financial performance. 18 Table of Contents Difficulty in Ordering Integrated Circuits and Increases in Commodities and Freight Costs Have Adversely Affected and Will Continue to Adversely Affect Our Business We have experienced difficulty in ordering ICs in the recent past and this difficulty could continue in the future.
Difficulty in Ordering Integrated Circuits and Increases in Commodities and Freight Costs Have Adversely Affected and Will Continue to Adversely Affect Our Business We have experienced difficulty in ordering ICs in the recent past and this difficulty could continue in the future.
Because there is no way to determine in advance whether, or to what extent, any present uncertainty will ultimately impact our business, you should give equal weight to each of the following: Risks Relating to Economic Conditions and Global Events General political and economic factors beyond our control could adversely affect our business and results of operations.
Because there is no way to determine in advance whether, or to what extent, any present uncertainty will ultimately impact our business, you should give equal weight to each of the following: Risks Relating to Finance We have incurred losses from operations and our future profitability is not certain.
Although we believe our tax estimates are reasonable, the final outcome of audits, investigations, and any other tax controversies could be materially different from our historical tax accruals. 22 Table of Contents Failure by Our International Operations to Comply With Anti-Corruption Laws or Trade Sanctions Could Increase Our Costs, Reduce Our Profits, Limit Our Growth, Harm Our Reputation, or Subject Us to Broader Liability We are subject to restrictions imposed by the U.S.
Failure by Our International Operations to Comply With Anti-Corruption Laws or Trade Sanctions Could Increase Our Costs, Reduce Our Profits, Limit Our Growth, Harm Our Reputation, or Subject Us to Broader Liability We are subject to restrictions imposed by the U.S.
While we generally have a broad and varied customer base, during the years ended December 31, 2024, 2023 and 2022, Daikin Industries Ltd. accounted for sales totaling more than 10% of our net sales. During the year ended December 31, 2022, Comcast Corporation also accounted for sales totaling more than 10% of our net sales.
While we generally have a broad and varied customer base, during the years ended December 31, 2025, 2024 and 2023, Daikin Industries Ltd. accounted for sales totaling more than 10% of our net sales. In addition, we have some customers that, individually or through their subsidiaries or affiliated partners, purchase a large amount of products from us.
However, it is impossible to predict with complete accuracy the occurrence and effect of fluctuations in consumer demand over a product's life cycle. Moreover, any growth in revenues that we achieve may be transitory and should not be relied upon as an indication of future performance.
However, it is impossible to predict with complete accuracy the occurrence and effect of fluctuations in consumer demand over a product's life cycle.
As customers become increasingly price sensitive, we have experienced new competition arising from manufacturers who decided to go into direct competition with us by performing their own manufacturing. If this development continues, we may experience downward pressure on our pricing or lose sales, which may have a material adverse effect on our operating results, financial condition and cash flows.
If this development continues, we may experience downward pressure on our pricing or lose sales, which may have a material adverse effect on our operating results, financial condition and cash flows.
As a result, we believe period-to-period comparisons of our results of operations are 25 Table of Contents not necessarily meaningful and should not be relied upon as an indication of future performance.
As a result, we believe period-to-period comparisons of our results of operations are not necessarily meaningful and should not be relied upon as an indication of future performance. Due to all of the foregoing factors, it is possible that in some future quarters our operating results will be below the expectations of public market analysts and investors.
Geopolitical tensions or conflicts, such as Russia’s invasion of Ukraine, may further heighten the risk of cybersecurity incidents and disruptions of our services and software on which we rely.
In addition, there has been a global increase in cybersecurity threat volume, frequency, and sophistication driven by the global enablement of remote workforces. Geopolitical tensions or conflicts, such as ongoing conflicts and uncertainties in Ukraine, Iran and Venezuela, may further heighten the risk of cybersecurity incidents and disruptions of our services and software on which we rely.
Change in Competition and Pricing Even with having our own factories, we will continue to rely on third-party manufacturers to build a portion of our products. Price is always an issue in winning and retaining business.
Change in Competition and Pricing Even with having our own factories, we will continue to rely on third-party manufacturers to build a portion of our products. As customers become increasingly price sensitive, we have experienced new competition arising from manufacturers who decided to go into direct competition with us by performing their own manufacturing.
We are monitoring these actions, which could have an adverse impact on our business strategy, operating results and financial condition. There can be no assurances that these tariffs will not be implemented or increased in the future, with the previously mentioned countries or additional countries with which we do business.
We are monitoring these actions, which could have an adverse impact on our business strategy, operating results and financial condition.
Due to all of the foregoing factors, it is possible that in some future quarters our operating results will be below the expectations of public market analysts and investors. If this happens the price of our common stock may be materially adversely affected.
If this happens the price of our common stock may be materially adversely affected.
Additionally, disruptions in financial markets could reduce our access to debt capital markets, negatively affecting our ability to implement our business strategy. On February 1, 2025, substantial tariffs on Canada, the PRC and Mexico were announced. There exists substantial uncertainty as to whether these tariffs will be fully implemented or sustained.
Additionally, disruptions in financial markets could reduce our access to debt capital markets, negatively affecting our ability to implement our business strategy. In the nations where we have operations or otherwise conduct business, we are also subject to tariffs, import/export controls, and other trade-related laws and limitations.
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Among other events, the invasion of Ukraine by Russia has escalated tensions among the United States, the North Atlantic Treaty Organization ("NATO") and Russia. Conflict in the Middle East has led to disruption of international shipping lanes, causing shipping delays and fluctuating freight costs.
Added
For the fiscal years ended December 31, 2025 and 2024,, we incurred a loss from operations of $6.4 million and $15.3 million, respectively, and our net loss for the fiscal years ended December 31, 2025 and 2024, was $18.6 million and $24.0 million, respectively, Our operating results and net income for future periods are subject to numerous uncertainties and we cannot be certain that we will be profitable or that we will not experience substantial losses in the future.
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Remote work and remote access to our systems has increased, which also increases the risk of cybersecurity incidents and disruptions and failures on our systems surface. In addition, there has been a global increase in cybersecurity threat volume, frequency, and sophistication driven by the global enablement of remote workforces.
Added
If we are not able to increase revenue and reduce our costs, we may not be able to achieve profitability in future periods and our business, financial condition, results of operations and cash flows may be adversely affected. We may not be able to obtain capital when desired on favorable terms, if at all, or without dilution to shareholders.
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Technology Changes in Control and Sensing We currently derive substantial revenue from the sale of remote controls, thermostats, sensors and home automation products based on IR and RF and other technologies. Other control technologies exist or may be developed that may compete with our technology.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeWhile we work to maintain our cybersecurity processes, there can be no 29 Table of Contents assurance that such actions will be sufficient to prevent cybersecurity incidents or mitigate all potential risks or threats to such systems, networks, and data or those of our third-party providers.
Biggest changeWhile we work to maintain our cybersecurity processes, there can be no assurance that such actions will be sufficient to prevent cybersecurity incidents or mitigate all potential risks or threats to such systems, networks, and data or those of our third-party providers. 30 Table of Contents
In carrying out his duties, our Vice President, Cybersecurity provides periodic reports to the Director of our Internal Audit Department, who, in turn, briefs the Audit Committee of the Board of Directors on the contents of such reports, including incident reports, compliance status and updates on cybersecurity initiatives.
In carrying out his duties, our Vice President, Cybersecurity provides periodic reports to the Director of our Internal Audit Department, who, in turn, briefs the Audit Committee of the Board on the contents of such reports, including incident reports, compliance status and updates on cybersecurity initiatives.
We conduct cybersecurity training with our employees as appropriate based on their roles within the Company. Governance Our Board of Directors plays a role in guiding and overseeing our cybersecurity strategies and has tasked our Audit Committee with the responsibility for cybersecurity oversight by setting policies, reviewing risk management strategies and reviewing compliance with legal and regulatory requirements.
We conduct cybersecurity training with our employees as appropriate based on their roles within the Company. Governance Our Board plays a role in guiding and overseeing our cybersecurity strategies and has tasked our Audit Committee with the responsibility for cybersecurity oversight by setting policies, reviewing risk management strategies and reviewing compliance with legal and regulatory requirements.
The Audit Committee, as appropriate, briefs the Board of Directors on cybersecurity matters. Management is also responsible for upholding our cybersecurity processes. To this end, we have established a global cybersecurity management team, led by our Vice President, Cybersecurity.
The Audit Committee, as appropriate, briefs the Board on cybersecurity matters. Management is also responsible for upholding our cybersecurity processes. To this end, we have established a global cybersecurity management team, led by our Vice President, Cybersecurity.
ITEM 1C. CYBERSECURITY We have developed cybersecurity risk management processes to identify, manage, and prevent risks related to cybersecurity. Our Information Technology ("IT") team manages our cybersecurity program and the security measures and processes we have in place. Risk Management and Strategy Cybersecurity is managed as part of our enterprise risk management program.
ITEM 1C. CYBERSECURITY We have developed cybersecurity risk management processes to identify, manage, and prevent risks related to cybersecurity. Our Information Technology ("IT") team manages our cybersecurity program and the security measures and processes we have in place. Risk Management and Strategy 29 Table of Contents Cybersecurity is managed as part of our enterprise risk management program.

Item 2. Properties

Properties — owned and leased real estate

2 edited+1 added−0 removed3 unchanged
Biggest changeWe utilize the following facilities: Location Purpose or Use Square Feet Status Scottsdale, Arizona Corporate headquarters, engineering, research and development 25,106 Leased, expires February 27, 2027 Hong Kong, PRC Asian headquarters 6,550 Leased, expires July 31, 2028 Enschede, Netherlands European headquarters and call center 19,440 Leased, expires February 28, 2029 Bangalore, India Engineering, research and development 21,326 Leased, expires June 30, 2025 Carlsbad, California Engineering, research and development 30,758 Leased, expires December 31, 2027 Plymouth, Minnesota Engineering, research and development 5,275 Leased, expires March 31, 2028 Poway, California Engineering, research and development 7,891 Leased, expires December 31, 2025 Santa Ana, California Engineering, research and development 18,420 Leased, expires November 30, 2027 Suzhou, PRC Engineering, research and development 5,705 Leased, expires December 31, 2025 Hai Duong, Vietnam Manufacturing facility 124,776 Leased, expires December 1, 2034 Manaus, Brazil Manufacturing facility 56,120 Leased, expires August 19, 2025 Monterrey, Mexico Manufacturing facility 61,296 Leased, expires April 15, 2029 Yangzhou, PRC (1) Manufacturing facility 1,247,688 Land leased, expires July 31, 2055 Yangzhou, PRC Manufacturing facility 77,888 Leased, expires October 31, 2025 Guangzhou, PRC Service center 26,850 Leased, expires April 14, 2026 (1) Private ownership of land in mainland PRC is not allowed.
Biggest changeWe utilize the following facilities: Location Purpose or Use Square Feet Status Scottsdale, Arizona Corporate headquarters, engineering, research and development 25,106 Leased, expires February 27, 2027 Hong Kong, PRC Asian headquarters 6,550 Leased, expires July 31, 2028 Enschede, Netherlands European headquarters and call center 19,440 Leased, expires February 28, 2029 Bangalore, India Engineering, research and development 21,326 Leased, expires May 31, 2026 Carlsbad, California Engineering, research and development 30,758 Leased, expires December 31, 2027 Plymouth, Minnesota Engineering, research and development 2,000 Leased, expires June 30, 2027 Poway, California Engineering, research and development 7,891 Leased, expires December 31, 2026 Santa Ana, California Engineering, research and development 18,420 Leased, expires November 30, 2027 Suzhou, PRC Engineering, research and development 5,705 Leased, expires December 31, 2027 Hai Duong, Vietnam Manufacturing facility 124,776 Leased, expires June 30, 2035 Manaus, Brazil Manufacturing facility 56,120 Leased, expires August 19, 2028 Monterrey, Mexico Manufacturing facility 61,296 Leased, closed July 31, 2025.
All land in the PRC is owned by the government and cannot be sold to any individual or entity. These facilities were developed on land which we lease from the PRC government. In addition to the facilities listed above, we lease space in various international locations, primarily for use as sales offices.
These facilities were developed on land which we lease from the PRC government. In addition to the facilities listed above, we lease space in various international locations, primarily for use as sales offices.
Added
Yangzhou, PRC (1) Manufacturing facility 1,247,688 Land leased, expires November 19, 2060 Guangzhou, PRC Service center 26,850 Leased, expires April 14, 2028 (1) Private ownership of land in mainland PRC is not allowed. All land in the PRC is owned by the government and cannot be sold to any individual or entity.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

4 edited+3 added−6 removed1 unchanged
Biggest changeWe may utilize various methods to effect the repurchases under the program, including open market repurchases, negotiated block transactions, accelerated share repurchases or open market solicitations for shares, some or all of which could be effected through Rule 10b5-1 plans.
Biggest changeThis authorization will remain in effect until such time as the Board terminates the authorization or the Share Repurchase Program is executed in full. We may utilize various methods to effect the repurchases, including in privately negotiated and/or open-market transactions, and pursuant to plans complying with Rule 10b5-1 promulgated under the Securities Exchange Act of 1934.
(2) On October 26, 2023, our Board approved a share repurchase program with an effective date of November 7, 2023. Pursuant to the program, we are authorized to repurchase up to 1,000,000 shares of our common stock.
(2) On October 26, 2023, our Board approved a share repurchase program with an effective date of November 7, 2023 (the "Share Repurchase Program"). Pursuant to the Share Repurchase Program, we are authorized to repurchase up to 1,000,000 shares of our common stock and to date, we have repurchased 986,444 shares of our common stock.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock trades on the NASDAQ Global Select Market under the symbol UEIC. Our stockholders of record on March 7, 2025 numbered 156. We have never paid cash dividends on our common stock.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock trades on the Nasdaq Global Select Market under the symbol UEIC. Our stockholders of record on March 4, 2026 numbered 134. We have never paid cash dividends on our common stock.
Purchases of Equity Securities The following table sets forth, for the fourth quarter, our total stock repurchases, average price paid per share and the maximum number of shares that may yet be purchased on the open market under our plans or programs: Period Total Number of Shares Purchased (1) Weighted Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (2) October 1, 2024 - October 31, 2024 — $ — — 778,362 November 1, 2024 - November 30, 2024 5,991 10.08 — 778,362 December 1, 2024- December 31, 2024 55 10.83 — 778,362 Total 6,046 $ 10.08 — (1) Of the repurchases in November and December, 5,991 and 55 shares, respectively, represent common shares of the Company that were owned and tendered by employees to satisfy tax withholding obligations in connection with the vesting of restricted shares.
Purchases of Equity Securities The following table sets forth, for the fourth quarter, our total stock repurchases, average price paid per share and the maximum number of shares that may yet be purchased on the open market under our plans or programs: Period Total Number of Shares Purchased (1) Weighted Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (2) October 1, 2025 - October 31, 2025 — $ — — 778,362 November 1, 2025- November 30, 2025 607,557 2.96 (607,557) 170,805 December 1, 2025- December 31, 2025 157,644 3.20 (157,249) 13,556 Total 765,201 $ — (764,806) (1) Of the repurchases in December, 395 shares represent common stock of the Company that was owned and tendered by employees to satisfy tax withholding obligations in connection with the vesting of restricted shares.
Removed
Performance Chart The following graph and table compares the cumulative total stockholder return with respect to our common stock versus the cumulative total return of the Standard & Poor's Small Cap 600 (the "S&P Small Cap 600"), the NASDAQ Composite Index, and the Peer Group Index for the five-year period ended December 31, 2024.
Added
On November 4, 2025, our Board authorized management to continue to execute under the Share Repurchase Program. As a result, pursuant to this authorization, we may, from time to time, repurchase up to the lesser of $1.2 million worth of our common stock or 13,556 shares (the total remaining number of shares available for repurchase under the Share Repurchase Program).
Removed
The comparison assumes that $100 was invested on December 31, 2019 in each of our common stock, S&P Small Cap 600, the NASDAQ Composite Index, and the Peer Group Index and that all dividends were reinvested.
Added
Neither this authorization nor the Share Repurchase Program obligates us to repurchase any shares of our common stock, and any repurchase of shares will be subject to market and other conditions and may be discontinued at any time.
Removed
We have not paid any dividends and, therefore, our cumulative total return calculation is based solely upon stock price appreciation and not upon reinvestment of dividends.
Added
On March 11, 2026, the Board authorized an amendment to the Share Repurchase Program to repurchase up to an additional 1,000,000 shares, or a total of 1,013,556 shares (including the 13,556 shares remaining available under the prior Board authorization for repurchase under the Share Repurchase Program).
Removed
The graph and table depicts year-end values based on actual market value increases and decreases relative to the initial investment of $100, based on information provided for each calendar year by the NASDAQ Stock Market and the New York Stock Exchange. 31 Table of Contents The comparisons in the graph and table below are based on historical data and are not intended to forecast the possible future performance of our common stock. 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 Universal Electronics Inc. $ 100 $ 100 $ 78 $ 40 $ 18 $ 21 S&P Small Cap 600 $ 100 $ 110 $ 137 $ 113 $ 129 $ 138 NASDAQ Composite Index $ 100 $ 144 $ 174 $ 117 $ 167 $ 215 Peer Group Index (1) $ 100 $ 170 $ 156 $ 117 $ 160 $ 142 (1) Companies in the legacy Peer Group Index are as follows: Dolby Laboratories, Inc.; Logitech International S.A.; VOXX International Corp.; and Xperi Corporation (formerly TiVo Corporation).
Removed
The information presented above is as of December 31, 2019 through December 31, 2024.
Removed
This information should not be deemed to be "soliciting material" or to be "filed" with the SEC or subject to the liabilities of Section 18 of the Exchange Act nor should this information be incorporated by reference into any prior or future filings under the Exchange Act, except to the extent that we specifically incorporate it by reference into a filing.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

50 edited+20 added−16 removed29 unchanged
Biggest changeWe have one domestic subsidiary and 24 international subsidiaries located in Brazil, British Virgin Islands, France, Germany, Hong Kong (3), India, Italy, Japan, Korea, Mexico (2), the Netherlands, People's Republic of China (the "PRC") (6), Singapore, Spain, United Kingdom and Vietnam.
Biggest changeWe have one domestic subsidiary and 22 international subsidiaries located in Brazil, France, Germany, Hong Kong (3), India, Italy, Japan, Korea, Mexico (2), the Netherlands, People's Republic of China (the "PRC") (6), Singapore, Spain, United Kingdom and Vietnam. 33 Table of Contents To recap our results for 2025: • Net sales decreased 6.7% to $368.3 million in 2025 from $394.9 million in 2024. • Our gross profit percentage remained consistent at 28.9% in 2025 and in 2024. • Operating expenses, as a percent of sales, decreased to 30.6% in 2025 from 32.7% in 2024. • Operating loss was $6.4 million in 2025 compared to $15.3 million in 2024, and our operating loss percentage was 1.7% in 2025, compared to 3.9% in 2024. • Income tax expense was $6.6 million in 2025 compared to $5.4 million in 2024.
Overview We design, develop, manufacture, ship and support home entertainment control products, technology and software solutions, climate control solutions, wireless sensors and smart home control products and audio-video ("AV") accessories, that are used by the world's leading brands in the home entertainment, climate control, consumer electronics, security, home automation and home appliance markets.
Overview We design, develop, manufacture, ship and support climate control solutions, wireless sensors and smart home control products, home entertainment control products, technology and software solutions and audio-video ("AV") accessories, that are used by the world's leading brands in the climate control, security, home automation and home appliance, home entertainment and consumer electronics markets.
We review our reserves quarterly, and we may adjust such reserves due to proposed assessments by tax authorities, changes in facts and circumstances, issuance of new regulations or new case law, previously unavailable information obtained during the course of an examination, negotiations between tax authorities of different countries concerning our transfer prices, execution of advanced pricing agreements, resolution with respect to individual audit issues, the resolution of entire audits, or the expiration of statutes of limitations.
We review our reserves quarterly, and we may adjust such reserves due to proposed assessments by tax authorities, changes in facts and circumstances, issuance of new regulations or new case law, previously unavailable information obtained during the course of an examination, negotiations between tax authorities of different countries concerning our transfer prices, execution of advanced pricing agreements, 35 Table of Contents resolution with respect to individual audit issues, the resolution of entire audits, or the expiration of statutes of limitations.
On an ongoing basis, we evaluate our estimates and judgments, including those related to revenue recognition, inventory valuation, impairment of long-lived assets, intangible assets and goodwill and income taxes. Actual 34 Table of Contents results may differ from these judgments and estimates, and they may be adjusted as more information becomes available.
On an ongoing basis, we evaluate our estimates and judgments, including those related to revenue recognition, inventory valuation, impairment of long-lived assets, intangible assets and goodwill and income taxes. Actual results may differ from these judgments and estimates, and they may be adjusted as more information becomes available.
Management believes the following critical accounting estimates affect our more significant judgments and estimates used in the preparation of our consolidated financial statements. In addition to the accounting policies mentioned below, see "ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA — Notes to Consolidated Financial Statements — Note 2" for other significant accounting policies.
Management believes the following critical accounting estimates affect our more significant judgments and estimates used in the preparation of our 34 Table of Contents consolidated financial statements. In addition to the accounting policies mentioned below, see "ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA — Notes to Consolidated Financial Statements — Note 2" for other significant accounting policies.
Our product and technology offerings include: • Home Entertainment Products: Our industry-leading portfolio includes RF-capable, voice-enabled universal remote control products; low-power RF and energy-harvesting microcontrollers, as well as embedded and Cloud software for AV and Smart Home device and content discovery and control. These solutions are sold primarily to video service providers and consumer electronics OEMs.
Home entertainment: • Home Entertainment Products: Our industry-leading portfolio includes RF-capable, voice-enabled universal remote control products; low-power RF and energy-harvesting microcontrollers, as well as embedded and Cloud software for AV and Smart Home device and content discovery and control. These solutions are sold primarily to video service providers and consumer electronics OEMs.
These solutions support control and delivery of home entertainment application services and content, smart home services and device or system information. New features include private, on-premise user presence and occupancy detection to enhance user experiences with their connected devices. • Intellectual Property and Licensing: We license our intellectual property primarily to OEMs and video service providers.
These solutions support control and delivery of home entertainment application services and content, smart home services and device or system information. New features include private, on-premise user presence and occupancy detection to enhance user experiences and extend user engagement on connected devices. • Intellectual Property and Licensing: We license our intellectual property primarily to OEMs and video service providers.
Macroeconomic Conditions We have been negatively impacted and we expect to continue to be negatively impacted by adverse macroeconomic conditions, including new tariffs imposed or to be imposed on goods manufactured in the PRC, Mexico and Canada, and reduced consumer spending on durable goods.
Macroeconomic Conditions We have been negatively impacted and we expect to continue to be negatively impacted by adverse macroeconomic conditions, including new tariffs imposed or to be imposed on goods manufactured in Vietnam, Taiwan, the PRC, and Mexico, and reduced consumer spending on durable goods.
Our income tax expense includes amounts intended to satisfy income tax assessments that result from these challenges in accordance with the accounting for uncertainty in income taxes 35 Table of Contents prescribed by U.S. GAAP. Determining the income tax expense for these potential assessments and recording the related assets and liabilities requires management judgments and estimates.
Our income tax expense includes amounts intended to satisfy income tax assessments that result from these challenges in accordance with the accounting for uncertainty in income taxes prescribed by U.S. GAAP. Determining the income tax expense for these potential assessments and recording the related assets and liabilities requires management judgments and estimates.
Our effective tax rate in 2024 and 2023, (29.2)% and (6.5)%, respectively, differs from the U.S. statutory rate of 21% primarily as a result of our jurisdictional mix of pre-tax income/loss, as well as losses incurred in the U.S. which are not benefited due to a valuation allowance.
Our effective tax rate in 2025 and 2024, (55.5)% and (29.2)%, respectively, differs from the U.S. statutory rate of 21% primarily as a result of our jurisdictional mix of pre-tax income/loss, as well as losses incurred in the U.S. which are not benefited due to a valuation allowance.
Our cloud-enabled software provides reliable firmware update provisioning and digital rights management validation services to major consumer electronics brands. We offer regular control library database and software updates to our licensing customers to ensure their systems are compatible with the latest devices entering the home. We operate as one business segment.
Our cloud-enabled software provides reliable firmware update provisioning and digital rights management validation services to major consumer electronics brands. We offer regular control library database and software updates to our licensing customers to ensure their systems are compatible with the latest devices entering the home.
Recent Accounting Pronouncements See "ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA — Notes to Consolidated Financial Statements — Note 2" for a discussion of recent accounting pronouncements.
Recent Accounting Pronouncements See "ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA — Notes to Consolidated Financial Statements — Note 2" for a discussion of recent accounting pronouncements. 39 Table of Contents
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS We generally discuss 2024 and 2023 items and year-to-year comparisons between 2024 and 2023 in the section that follows.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS We generally discuss fiscal years 2025 and 2024 items and year-to-year comparisons between 2025 and 2024 in the section that follows.
Year Ended December 31, 2024 2023 Net sales 100.0 % 100.0 % Cost of sales 71.1 76.8 Gross profit 28.9 23.2 Research and development expenses 7.5 7.4 Selling, general and administrative expenses 23.3 23.4 Factory restructuring charges 0.9 1.0 Legal judgment 1.1 — Goodwill impairment — 11.7 Operating income (loss) (3.9) (20.3) Interest income (expense), net (0.8) (1.0) Other income (expense), net 0.0 (0.6) Income (loss) before provision for income taxes (4.7) (21.9) Provision for income taxes 1.4 1.4 Net income (loss) (6.1) % (23.3) % Year Ended December 31, 2024 ("2024") Compared to Year Ended December 31, 2023 ("2023") Net sales.
Year Ended December 31, 2025 2024 Net sales 100.0 % 100.0 % Cost of sales 71.1 71.1 Gross profit 28.9 28.9 Research and development expenses 7.1 7.5 Selling, general and administrative expenses 23.2 23.3 Factory restructuring charges 0.3 0.9 Legal judgment — 1.1 Operating income (loss) (1.7) (3.9) Interest income (expense), net (0.3) (0.8) Other income (expense), net (1.3) 0.0 Income (loss) before provision for income taxes (3.3) (4.7) Provision for income taxes 1.8 1.4 Net income (loss) (5.1) % (6.1) % Year Ended December 31, 2025 ("2025") Compared to Year Ended December 31, 2024 ("2024") Net sales.
Discussions of 2022 items and year-to-year comparisons between 2023 and 2022 that are not included in this Annual Report on Form 10-K may be found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on March 14, 2024.
Discussions of fiscal year 2023 items and year-to-year comparisons between 2024 and 2023 that are not included in this Annual Report on Form 10-K may be found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2024.
Amounts available for borrowing under the China Credit Line are reduced by the balance of any outstanding letters of credit, of which there were none at December 31, 2024. At December 31, 2024, we had an outstanding balance of RMB 80.0 million (approximately $11.0 million) on our China Credit Line and no remaining availability. See "ITEM 8.
Amounts available for borrowing under the China Credit Line are reduced by the balance of any outstanding letters of credit, of which there were none at December 31, 2025. At December 31, 2025, we had an outstanding balance of RMB 130.0 million (approximately $18.6 million) on our China Credit Line and no remaining availability. See "ITEM 8.
We anticipate that we will continue to utilize both cash flows from operations and our revolving lines of credit to support ongoing business operations, capital expenditures, discretionary share repurchases and potential acquisitions.
When needed, we have utilized our revolving lines of credit to fund operations, share repurchases and acquisitions. We anticipate that we will continue to utilize both cash flows from operations and our revolving lines of credit to support ongoing business operations, capital expenditures, discretionary share repurchases and potential acquisitions.
("GTY"), has a Line of Credit Agreement ("Line of Credit Agreement") with the Bank of China, which provides for a revolving line of credit ("China Credit Line" and, together with the U.S. Credit Line, "Credit Lines") through July 24, 2025.
("GTY"), has a Line of Credit Agreement ("Line of Credit Agreement") with the Bank of China, which provides for a revolving line of credit ("China Credit Line" and, together with the U.S. Credit Line, "Credit Lines") through July 16, 2026.
During the year ended December 31, 2023, we recorded $4.0 million in expense, including severance and other closure related activities pertaining to our southern PRC factory, and moving costs associated with the transfer of equipment from our Mexico factory to our new facility in Vietnam. Legal judgment.
During the year ended December 31, 2024, we recorded $3.6 million in expense, including severance and other closure related activities pertaining to our southern PRC factory, and moving costs associated with the transfer of equipment from our Mexico factory to our facility in Vietnam. Legal judgment.
The China Credit Line has a maximum availability up to RMB 80.0 million (approximately $11.0 million), subject to meeting certain financial conditions. The China Credit Line may be used for working capital purposes.
The China Credit Line has a maximum availability up to RMB 130.0 million (approximately $18.6 million), subject to meeting certain financial conditions. The China Credit Line may be used for working capital purposes.
Future cash flows used for investing activities are largely dependent on the timing and amount of capital expenditures and the development of patents. We estimate that we will incur between $9.0 million and $11.0 million during 2025. Net cash used for financing activities was $19.8 million during 2024 compared to $34.8 million during 2023.
Future cash flows used for investing activities are largely dependent on the timing and amount of capital expenditures and the development of patents. We estimate that we will incur between $6.0 million and $8.0 million during 2026. Net cash used for financing activities was $16.7 million during 2025 compared to $19.8 million during 2024.
Changes in accrued income taxes resulted in cash inflows of $1.3 million during the year ended December 31, 2024 compared to cash outflows of $3.5 million during the year ended December 31, 2023.
Changes in accrued income taxes resulted in cash inflows of $1.9 million during the year ended December 31, 2025 compared to cash inflows of $1.3 million during the year ended December 31, 2024.
Net cash used for investing activities during 2024 was $8.4 million, of which $4.5 million and $3.9 million was used for capital expenditures and the development of patents, respectively. Net cash used for investing activities during 2023 was $13.9 million, of which $8.1 million and $5.8 million was used for capital expenditures and the development of patents, respectively.
Net cash used for investing activities during 2025 was $6.8 million, of which $3.9 million and $3.0 million was used for capital expenditures and the development of patents, respectively. Net cash used for investing activities during 2024 was $8.4 million, of which $4.5 million and $3.9 million was used for capital expenditures and the development of patents, respectively.
The primary financing activities in 2024 and 2023 were borrowings and repayments on our Credit Lines and repurchases of shares of our common stock. Net repayments on our Credit Lines were $17.8 million in 2024 and $33.0 million in 2023.
The primary financing activities in 2025 and 2024 were borrowings and repayments on our Credit Lines and repurchases of shares of our common stock. Net repayments on our Credit Lines were $13.6 million in 2025 and $17.8 million in 2024.
The majority of our cash is held outside of the United States and may be repatriated to the United States but, under current law, may be subject to federal and state income taxes and foreign withholding taxes.
The majority of our cash is held outside of the United States and may be repatriated to the United States but, under current law, may be subject to federal and state income taxes and foreign withholding taxes. Additionally, repatriation of some foreign balances is restricted by local laws.
During 2024, we purchased 206,598 shares of our common stock at a cost of $2.0 million compared to 164,540 shares at a cost of $1.8 million during 2023.
During 2025, we purchased 871,501 shares of our common stock at a cost of $3.1 million compared to 206,598 shares at a cost of $2.0 million during 2024.
Days sales outstanding were 81 days at December 31, 2024 compared to 94 days at December 31, 2023. Changes in accounts payable and accrued liabilities resulted in cash inflows of $15.7 million during the year ended December 31, 2024 due primarily to the timing of payments in the fourth quarter.
Changes in accounts payable and accrued liabilities resulted in cash outflows of $15.7 million during the year ended December 31, 2024, due primarily to the timing of payments in the fourth quarter.
Our UEI TIDE Family of Climate Control solutions feature advanced technologies such as Wi-Fi, BLE, Zigbee and Matter, along with sensors for temperature, humidity, proximity, occupancy and carbon dioxide sensing. • Smart Home and Security Products: We offer proprietary and standards-based RF sensors designed for residential security, safety and home automation applications.
Our UEI TIDE Family of Climate Control solutions feature advanced technologies such as WiFi, BLE, Zigbee and Matter, and connect to sensors for temperature, humidity, proximity, occupancy and carbon dioxide sensing. • Smart Home and Security Products: We offer proprietary and standards-based radio frequency ("RF") wireless remote controls and sensors designed for residential security, safety and a broad variety of home automation applications, such as smart lighting and motorized shades.
Other income (expense), net. Other income, net was $0.1 million in 2024, compared to other expense, net of $2.6 million in 2023. The improvement was primarily due to a reduction in net foreign currency losses. Provision for income taxes. Income tax expense was $5.4 million in 2024 compared to $6.0 million in 2023.
Other income (expense), net. Other income, net was $4.6 million in 2025, from $0.1 million in 2024. The deterioration was primarily due to an increase in net foreign currency losses. Provision for income taxes. Income tax expense was $6.6 million in 2025 compared to $5.4 million in 2024.
December 31, 2024 2023 Cash and cash equivalents $ 26,783 $ 42,751 Available borrowing resources 32,300 70,000 Cash and cash equivalents – At December 31, 2024, we had $2.0 million, $10.1 million, $2.3 million, $7.1 million and $5.3 million of cash and cash equivalents in North America, the PRC, Asia (excluding the PRC), Europe, and South America, respectively.
December 31, 2025 2024 Cash and cash equivalents $ 32,306 $ 26,783 Available borrowing resources 42,459 32,300 37 Table of Contents Cash and cash equivalents – At December 31, 2025, we had $1.6 million, $9.0 million, $4.6 million, $10.0 million and $7.2 million of cash and cash equivalents in North America, the PRC, Asia (excluding the PRC), Europe, and South America, respectively.
The following discussion should be read in conjunction with the Consolidated Financial Statements and the related notes that appear elsewhere in this document.
The following discussion should be read in conjunction with the Consolidated Financial Statements and the related notes that appear elsewhere in this document. In addition to historical information, the following discussion contains forward-looking statements that involve risks and uncertainties.
Depreciation and amortization was $18.1 million for the year ended December 31, 2024 compared to $22.9 million during the year ended December 31, 2023, due to decreased purchases of property, plant and equipment over recent years.
Net loss was $18.6 million for the year ended December 31, 2025 compared to $24.0 million for the year ended December 31, 2024. 38 Table of Contents Depreciation and amortization was $14.2 million for the year ended December 31, 2025 compared to $18.1 million during the year ended December 31, 2024, due to decreased purchases of property, plant and equipment over recent years.
During the year ended December 31, 2024, we recorded $3.6 million in expense, including severance and moving costs associated with the downsizing of our factory in Mexico and the closures of our southern and eastern PRC factories.
During the year ended December 31, 2025, we recorded $1.2 million in expense, including severance and moving costs associated with the closure of our factory in Mexico.
Liquidity and Capital Resources Sources of Cash Historically, we have utilized cash provided from operations as our primary source of liquidity, as internally generated cash flows have typically been sufficient to support our business operations, capital expenditures and discretionary share repurchases. When needed, we have utilized our revolving lines of credit to fund operations, share repurchases and acquisitions.
Liquidity and Capital Resources Sources of Cash While we incurred a loss from operations of $6.4 million in 2025 and $15.3 million in 2024, historically, we have utilized cash provided from operations as our primary source of liquidity, as internally generated cash flows have typically been sufficient to support our business operations, capital expenditures and discretionary share repurchases.
Uses of Cash Our cash flows were as follows: (In thousands) Year Ended December 31, 2024 Increase (Decrease) Year Ended December 31, 2023 Cash provided by (used for) operating activities $ 14,822 $ (10,368) $ 25,190 Cash provided by (used for) investing activities (8,428) 5,449 (13,877) Cash provided by (used for) financing activities (19,764) 15,015 (34,779) Effect of foreign currency exchange rate changes on cash and cash equivalents (2,598) (2,075) (523) Net increase (decrease) in cash and cash equivalents $ (15,968) $ 8,021 $ (23,989) December 31, 2024 Increase (Decrease) December 31, 2023 Cash and cash equivalents $ 26,783 $ (15,968) $ 42,751 Working capital 84,203 (13,500) 97,703 Net cash provided by operating activities was $14.8 million during 2024 compared to $25.2 million during 2023.
Uses of Cash Our cash flows were as follows: (In thousands) Year Ended December 31, 2025 Increase (Decrease) Year Ended December 31, 2024 Cash provided by (used for) operating activities $ 23,626 $ 8,804 $ 14,822 Cash provided by (used for) investing activities (6,751) 1,677 (8,428) Cash provided by (used for) financing activities (16,658) 3,106 (19,764) Effect of foreign currency exchange rate changes on cash and cash equivalents 5,306 7,904 (2,598) Net increase (decrease) in cash and cash equivalents $ 5,523 $ 21,491 $ (15,968) December 31, 2025 Increase (Decrease) December 31, 2024 Cash and cash equivalents $ 32,306 $ 5,523 $ 26,783 Working capital 85,809 1,606 84,203 Net cash provided by operating activities was $23.6 million during 2025 compared to $14.8 million during 2024.
Changes in accounts receivables and contract assets resulted in cash outflows of $12.2 million during the 38 Table of Contents year ended December 31, 2024 compared to cash inflows of $5.0 million during the year ended December 31, 2023, largely as a result of an increase in and timing of sales in the fourth quarter of 2024 compared to the fourth quarter of 2023 offset partially by a decrease in days sales outstanding.
Changes in accounts receivables and contract assets resulted in cash inflows of $41.5 million during the year ended December 31, 2025 compared to cash outflows of $12.2 million during the year ended December 31, 2024, largely as a result of decreased sales and improved customer collections.
Credit Line are reduced by the balance of any outstanding letters of credit, of which there were none at December 31, 2024. At December 31, 2024, we had an outstanding balance of $26.0 million on our U.S. Credit Line and $32.3 million of availability. Our subsidiary, Gemstar Technology (Yangzhou) Co. Ltd.
At December 31, 2025, we had an outstanding balance of $5.5 million on our U.S. Credit Line and $42.5 million of availability. Our subsidiary, Gemstar Technology (Yangzhou) Co. Ltd.
At February 18, 2025, the U.S. Credit Line total availability was $60.5 million based upon the AR Ratio. The U.S. Credit Line may be used for working capital and other general corporate purposes including acquisitions, share repurchases and capital expenditures. Amounts available for borrowing under the U.S.
Credit Line may be used for working capital and other general corporate purposes including acquisitions, share repurchases and capital expenditures. Amounts available for borrowing under the U.S. Credit Line are reduced by the balance of any outstanding letters of credit, of which there were $0.5 million at December 31, 2025.
Material Cash Commitments – The following table summarizes our material cash commitments and the effect these commitments are expected to have on our cash flows in future periods: Payments Due by Period (In thousands) Total Less than 1 year 1 - 3 years 4 - 5 years After 5 years Credit Lines $ 36,960 $ 10,960 $ 26,000 $ — $ — Inventory purchases 9,292 9,292 — — — Operating lease obligations 15,242 4,642 6,819 1,951 1,830 Property, plant, and equipment purchases 927 927 — — — Software license 7,282 1,183 2,251 2,566 1,282 Total material cash commitments $ 69,703 $ 27,004 $ 35,070 $ 4,517 $ 3,112 We anticipate meeting our material cash commitments with our cash generated from operations and available borrowing on our Credit Lines.
Material Cash Commitments – The following table summarizes our material cash commitments and the effect these commitments are expected to have on our cash flows in future periods: Payments Due by Period (In thousands) Total Less than 1 year 1 - 3 years 4 - 5 years After 5 years Credit Lines $ 24,079 $ 18,579 $ 5,500 $ — $ — Inventory purchases 4,314 4,310 4 — — Operating lease obligations 11,017 3,899 4,355 1,101 1,662 Property, plant, and equipment purchases 736 736 — — — Software license 6,101 1,074 2,461 2,566 — Total material cash commitments $ 46,247 $ 28,598 $ 12,320 $ 3,667 $ 1,662 We anticipate meeting our material cash commitments with our cash generated from operations and available borrowing on our Credit Lines.
R&D expenses decreased 5.0% to $29.7 million in 2024 from $31.3 million in 2023. The decrease in R&D expenses is primarily due to reduced third-party product development costs and a reduction in headcount. Selling, general and administrative ("SG&A") expenses.
The decrease in R&D expenses is primarily attributable to reductions in payroll and related personnel expenses of $2.6 million following headcount optimization actions, a reduction of discretionary travel spending of $0.3 million and also reduced third-party product development costs. Selling, general and administrative ("SG&A") expenses. SG&A expenses decreased 7.0% to $85.4 million in 2025 from $91.8 million in 2024.
During the year ended December 31, 2024, we recorded $4.2 million in expense, relating to an adverse judgment against one of our subsidiaries located in the PRC. We have appealed this ruling and expect a decision on our appeal in early to mid-April 2025. Goodwill impairment.
During the year ended December 31, 2024, we recorded $4.2 million in expense, relating to an adverse judgment against one of our subsidiaries located in the PRC. Interest income (expense), net. Net interest expense decreased to $0.9 million in 2025 from $3.4 million in 2024, primarily as a result of a lower average loan balance and lower interest rates.
Changes in accounts payable and accrued liabilities resulted in cash outflows of $21.4 million during the year ended December 31, 2023 due primarily to a decrease in inventory purchases as a result of lower demand.
Days sales outstanding were 75 days at December 31, 2025 compared to 81 days at December 31, 2024. Changes in accounts payable and accrued liabilities resulted in cash outflows of $33.2 million during the year ended December 31, 2025, due primarily to the timing of payments in the fourth quarter and the reduced inventory purchases associated with lower sales demand.
Additionally, repatriation of some foreign balances is restricted by local laws. 37 Table of Contents Available Borrowing Resources – Our Second Amended and Restated Credit Agreement ("Second Amended Credit Agreement") with U.S. Bank National Association ("U.S. Bank") provides for a revolving line of credit ("U.S. Credit Line") that expires on April 30, 2026. The U.S.
Available Borrowing Resources – Our Second Amended and Restated Credit Agreement ("Second Amended Credit Agreement") with U.S. Bank National Association ("U.S. Bank") provides for a revolving line of credit ("U.S. Credit Line") that expires on September 30, 2027. The U.S. Credit Line has a maximum availability up to $60.0 million, subject to meeting certain financial conditions.
Our integrated circuits, on which our software and universal control database is embedded, are sold primarily to OEMs, video service providers, smart home dealers and private label customers. • Software and Cloud Services: Our software, firmware and technology solutions enable devices such as smart TVs, hybrid set-top boxes, audio systems, smart speakers, game consoles and other consumer electronic and smart home devices to wirelessly connect and interoperate within home networks.
Our integrated circuits, on which our software and universal control database is embedded, are sold primarily to OEMs, video service providers, smart home dealers and private label customers. We operate as one business segment.
We also distribute a broad portfolio of replacement remote controls, powerful free-to-air antennae and television and soundbar wall mounts direct to retailers worldwide under the One For All brand. • Climate Control Solutions: Our innovative climate control solutions include wall-mounted and handheld thermostat controllers and connected accessories for smart energy management systems.
We also distribute a broad portfolio of replacement remote controls, powerful free-to-air antennae and television and soundbar wall mounts direct to retailers worldwide under the One For All brand. • Software and Cloud Services: Our software, firmware and technology solutions enable devices such as smart TVs, hybrid set-top boxes, game consoles and other consumer electronic and smart home devices to wirelessly connect and interoperate on the home network.
Management will continue to seek ways to lessen the impact these pressures may have on our margins and overall financial results by executing on our plan to reduce our manufacturing overhead and to locate alternative and less expensive sources of component parts and materials.
Management will continue to seek ways to lessen the impact these pressures may have on our margins and financial results; however, these mitigation efforts may not be successful and these pressures may have a material adverse effect on our business.
Net sales for 2024 were $394.9 million, a decrease of 6.1% compared to $420.5 million in 2023. We have experienced lower customer demand in both our home entertainment and climate control channels.
Net sales for 2025 were $368.3 million, a decrease of 6.7% compared to $394.9 million in 2024.
These products are primarily sold to original equipment manufacturer (“OEM”) customers, as well as hotels, hospitality and system integrators.
Our product and technology offerings include: Connected home: • Climate Control Solutions: Our innovative climate control solutions include wireless and wired controllers, smart thermostats and connected peripherals for sensing and smart energy management. These products are primarily sold to original equipment manufacturer ("OEM") customers, as well as hotels, utilities and system integrators.
Inventories decreased by $6.2 million during the year ended December 31, 2024 compared to a decrease of $51.5 million during the year ended December 31, 2023. The significant decrease in inventories during the year ended December 31, 2023 is primarily the result of cord cutting, as there was less demand for our video service products.
Inventories decreased by $4.6 million during the year ended December 31, 2025 compared to a decrease of $6.2 million during the year ended December 31, 2024. The decreases in inventories in both years were consistent with the lower sales demand. Our inventory turns were 2.8 turns at December 31, 2025 compared to 3.0 turns at December 31, 2024.
To help offset these negative impacts, we have implemented cost saving measures including rightsizing our manufacturing footprint and reducing operational and administrative headcount; however, such measures may not fully offset the impact of lower sales demand and cost increases, which would negatively impact our gross margins and overall financial results.
The full impact of these governmental actions on macroeconomic conditions and on our business is uncertain and difficult to predict and may result in lower sales and/or cost increases, which would negatively impact our gross margins and overall financial results.
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To recap our results for 2024: • Net sales decreased 6.1% to $394.9 million in 2024 from $420.5 million in 2023. • Our gross profit percentage increased to 28.9% in 2024 from 23.2% in 2023. • Operating expenses, as a percent of sales, decreased to 32.7% in 2024 from 43.5% in 2023. • Operating loss was $15.3 million in 2024 compared to $85.3 million in 2023, and our operating loss percentage was 3.9% in 2024, compared to 20.3% in 2023. • Income tax expense was $5.4 million in 2024 compared to $6.0 million in 2023. 33 Table of Contents Our strategic business objectives for 2025 include the following: • Build long-term (3-5 year) revenue pipeline by engaging with industry leading brands and securing new and continuing product design wins with top 10 major HVAC OEMs; • Commercially deploy the UEI TIDE family of products in multiple dwelling unit and utility channels and leverage initial deployments to validate, and promote, turnkey solution to address industry need; • Create a footprint in broadband gateway platforms with expanded QuickSet Cloud software offerings; • Expand QuickSet Cloud software penetration in the TV OS market through development and commercial deployment of QuickSet features such as content personalization, privacy-first presence detection and monitoring; • Expand AI-powered cloud services, and on-device AI developments to generate opportunities for recurring revenue streams in software licensing; • Position UEI as the development partner of choice in smart digital thermostat control through innovation and next generation products; • Launch new product categories in direct-to-consumer channel and build a growth revenue business with sustainable gross margins; • Expand our technology offerings and development capabilities in new standards such as WiFi6, Thread, Matter and Z-Wave Long Range; • Seek potential acquisitions or strategic partners that complement and strengthen our existing commercial footprint, add new capabilities, and offer strong synergies; and • Manage our long-term global manufacturing footprint by optimizing internal investments and seeking external manufacturing partnerships where appropriate.
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These forward-looking statements include, but are not limited to, those matters discussed under the heading “Forward-looking Statements.” Our actual results could differ materially from those anticipated by these forward‑looking statements due to various factors, including, but not limited to, those set forth under Item 1A. Risk Factors of this Annual Report on Form 10-K and elsewhere in this document.
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We have also been adversely impacted by inflationary pressures, including increased component and logistics costs and increases in wages and costs of borrowing funds.
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Economic tensions and changes in international trade policies, including the recent widespread tariffs announced by the U.S. on its major trading partners, higher tariffs on imported goods, actions taken in response (such as retaliatory tariffs or other trade protectionist measures or the renegotiation of free trade agreements), could also further impact the global market for our products.
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Manufacturing Footprint We have been evaluating our global manufacturing footprint based upon our long-term factory planning strategy to (1) de-risk our reliance on a PRC-based supply chain and (2) reduce our manufacturing capacity due to decreased demand and a change in mix of our products.
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Manufacturing Footprint We have continued to evaluate our global manufacturing footprint as part of our overall cost optimization and return to profitability strategy. In July 2025, our Board approved a plan to shut down our Mexico manufacturing facility.
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As part of this evaluation, we (1) opened a new factory in Vietnam which commenced operations in June 2023, (2) stopped production activities of our southwestern PRC factory in the third quarter 2023 and completed its shutdown in the first quarter 2024, (3) stopped production activities and shutdown operations of our smaller eastern PRC factory during the fourth quarter 2024, and (4) downsized and streamlined our Mexico operations throughout 2024.
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As of December 31, 2025 we have successfully closed the Mexico manufacturing facility and moved production from such facility to a combination of our Vietnam factory and a contract manufacturer based in Mexico.
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As a result of these decisions, we recorded severance and other restructuring expenses of $3.6 million and $4.0 million during the years ended December 31, 2024 and December 31, 2023, respectively. Additionally, we recorded impairment charges of $7.7 million during the year ended December 31, 2023.
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Short-Term Employee Furlough In October 2025, we announced a short-term furlough program affecting approximately 3% of our workforce in November 2025 and 4% of our workforce in December 2025.
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We will continue to evaluate our global factory footprint to identify ways to operate more efficiently and decisions may result in charges that could have a material effect on the consolidated the financial statements. Critical Accounting Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States ("U.S.
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This action was taken as part of our cost containment efforts, and was designed to align labor costs with current business activity levels during the year-end holiday season, while preserving long-term employment relationships. The furloughs were temporary in nature, with affected employees returning to work after 80 hours.
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Our home entertainment channel continues to be adversely affected by cord cutting, while our climate control channel is experiencing a decrease in demand in Europe, which we believe is a result of recent reductions in governmental subsidies for heat pump technology. Gross profit. Gross profit in 2024 was $114.0 million compared to $97.6 million in 2023.
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During the furlough period, the Company continued to provide certain benefits to affected employees, including healthcare coverage. The furlough program modestly reduced our labor-related expenses and supported ongoing cost management objectives. Critical Accounting Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States ("U.S.
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Gross profit as a percent of sales increased to 28.9% in 2024 compared to 23.2% in 2023. The execution of our factory footprint optimization plan has resulted in a significant reduction of excess manufacturing capacity, yielding a gross margin rate improvement of approximately 370 basis points.
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Net sales by channel were as follows: Year Ended December 31, (In thousands) 2025 2024 Connected home $ 125,384 $ 108,258 Home entertainment 242,904 286,621 Total net sales $ 368,288 $ 394,879 Net sales in connected home were $125.4 million for the year ended December 31, 2025 compared to $108.3 million for the year ended December 31, 2024.
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During the year ended December 31, 2023, we took a charge of $7.7 million for the impairment of fixed assets related to the execution of our factory footprint optimization plan, which negatively impacted the gross profit rate for that period by 180 basis points.
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This growth is driven primarily by shipments to large climate control and home automation customers relating to projects won over the past couple of years. Net sales in home entertainment were $242.9 million for the year ended December 31, 2025 compared to $286.6 million for the year ended December 31, 2024.
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In addition, a stronger U.S. dollar in 2024 compared to 2023 resulted in a 70 basis point improvement in our gross margin rate. Partially offsetting these improvements was an unfavorable product mix, which resulted in a 50 basis point decline in our gross margin rate. Research and development ("R&D") expenses.
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The decrease in sales within the home entertainment channel was primarily driven by lower demand for subscription broadcasting products in Europe and Latin America, particularly for basic remote controls with lower price points and limited or no advanced features.
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SG&A expenses decreased 6.8% to $91.8 million in 2024 from $98.5 million in 2023, due to a decrease in compensation expenses associated with a reduction in headcount and a decrease in outside legal expenses related to a specific legal matter. 36 Table of Contents Factory restructuring charges.
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In addition, several customers in the consumer electronics industry experienced reduced demand for televisions, which led to a corresponding decline in remote control sales in this channel. The retail market also remained weak in 2025, reflecting elevated inventory levels and soft sell-through performance. Gross profit. Gross profit in 2025 was $106.5 million compared to $114.0 million in 2024.
Removed
During the year ended December 31, 2023, we recorded a non-cash goodwill impairment charge of $49.1 million due to our market capitalization being significantly less than the carrying value of our equity. Interest income (expense), net. Net interest expense decreased to $3.4 million in 2024 from $4.3 million in 2023, primarily as a result of a lower average loan balance.
Added
Gross profit as a percent of sales remained consistent at 28.9% in 2025 and 2024. During 2025, gross margin benefited from the stabilization of global freight rates and the Company’s ongoing initiatives to optimize freight and logistics spending, which collectively contributed approximately 60 basis points of improvement compared to the prior year.
Removed
Our liquidity is subject to various risks including the market risks identified in "ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK".
Added
Gross margin was further favorably impacted by foreign currency movements. A weaker U.S. dollar relative to the Euro and British Pound, together with a stronger U.S. dollar relative to the Vietnamese Dong, contributed approximately 90 basis points of gross margin improvement.
Removed
Credit Line has a maximum availability up to $75.0 million, subject to meeting certain financial conditions, including an accounts receivable coverage ratio ("AR Ratio"). This AR Ratio is calculated monthly and adjusts the current U.S. Credit Line total availability. At December 31, 2024, the U.S. Credit Line total availability was $58.3 million based upon the AR Ratio.
Added
These favorable impacts were partially offset by incremental tariff costs that were not recoverable through customer pricing actions, which reduced gross margin by approximately 100 basis points during 2025.
Removed
Net loss was $24.2 million for the year ended December 31, 2024 compared to $98.2 million for the year ended December 31, 2023, which includes the impairments of goodwill of $49.1 million and long-lived assets of $8.0 million.
Added
In addition, we recorded an additional $0.9 million 36 Table of Contents impairment charge related to machinery and equipment that will no longer be utilized following the closure of our Mexico manufacturing facility in the fourth quarter of 2025. Research and development ("R&D") expenses. R&D expenses decreased 11.6% to $26.3 million in 2025 from $29.7 million in 2024.

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