UNIVERSAL ELECTRONICS INC
For the period ended Jun 30, 2026. Filed Aug 6, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2026 · Filed Aug 6, 2026
UEIC$5.52+13.6%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-03-31; filed 2026-05-11.
0000101984-26-000058
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-08-06.
0000101984-26-000110
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 62 previous paragraphs and 72 current paragraphs.
37 unchanged; 23 reworded; 5 added; 2 removed; 0 previous and 7 current paragraphs rearranged.
Tables are not compared: 6 previous and 7 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (5)
Current report
•Net sales decreased 25.0% to $73.2 million for the three months ended June 30, 2026 from $97.7 million for the three months ended June 30, 2025.
Current report
•Income tax expense was $1.1 million for the three months ended June 30, 2026 compared to $1.8 million for the three months ended June 30, 2025.
Current report
Six Months Ended June 30, 2026 versus Six Months Ended June 30, 2025
Current report
Gross profit. Gross profit for the six months ended June 30, 2026 was $46.5 million compared to $55.3 million for the six months ended June 30, 2025. Gross profit as a percentage of sales increased to 30.5% for the six months ended June 30, 2026 from 29.1% for the six months ended June 30, 2025. The improvement in gross margin was primarily driven by the sale of tariff claims and the associated mix impact, which contributed approximately 330 basis points and 70 basis points respectively, and improved management of inbound freight costs, which contributed approximately 60 basis points. These favorable impacts were partially offset by higher component costs driven by market conditions, which reduced gross margin by approximately 110 basis points, an unfavorable change in sales mix, which reduced margin by approximately 80 basis points and incremental tariff costs that were not recoverable through customer pricing actions and others, which reduced gross margin by approximately 70 basis points. In addition, the weaker U.S. dollar relative to the Chinese Renminbi had an adverse impact of approximately 60 basis points on gross margin.
Current report
Other income (expense), net. Other income, net was $1.6 million for the six months ended June 30, 2026 compared to other income (expense), net of $1.7 million for the six months ended June 30, 2025. The amount was primarily attributable to foreign currency losses incurred in the first half year of 2026.
Removed paragraphs (2)
Previous report
•Net sales decreased 14.4% to $79.0 million for the three months ended March 31, 2026 from $92.3 million for the three months ended March 31, 2025.
Previous report
•Income tax expense was $3.6 million for the three months ended March 31, 2026 compared to $2.2 million for the three months ended March 31, 2025.
Reworded paragraphs (23)
Previous wording
•Our gross margin percentage decreased to 26.1% for the three months ended March 31, 2026 from 28.3% for the three months ended March 31, 2025.
Current wording
•Our gross margin percentage increased to 35.4% for the three months ended June 30, 2026 from 29.9% for the three months ended June 30, 2025.
Previous wording
•Operating expenses, as a percentage of net sales, decreased to 31.0% for the three months ended March 31, 2026 from 32.3% for the three months ended March 31, 2025.
Current wording
•Operating expenses, as a percentage of net sales, decreased to 28.8% for the three months ended June 30, 2026 from 28.9% for the three months ended June 30, 2025.
Previous wording
•Our operating loss was $3.9 million for the three months ended March 31, 2026 compared to operating loss of $3.8 million for the three months ended March 31, 2025. Our operating loss percentage was 4.9% for the three months ended March 31, 2026 compared to our operating income percentage of 4.1% for the three months ended March 31, 2025.
Current wording
•Our operating income was $4.8 million for the three months ended June 30, 2026 compared to operating income of $1.0 million for the three months ended June 30, 2025. Our operating income percentage was 6.5% for the three months ended June 30, 2026 compared to our operating income percentage of 1.0% for the three months ended June 30, 2025.
Previous wording
An accounting estimate is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, if different estimates reasonably may have been used, or if changes in the estimate that are reasonably likely to occur may materially impact the financial statements. We do not believe that there have been any significant changes during thethree months ended March 31, 2026 to the items that we disclosed as our critical accounting policies and estimates in Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained in the 2025 Form 10-K.
Current wording
An accounting estimate is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, if different estimates reasonably may have been used, or if changes in the estimate that are reasonably likely to occur may materially impact the financial statements. We do not believe that there have been any significant changes during the six months ended June 30, 2026 to the items that we disclosed as our critical accounting policies and estimates in Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained in the 2025 Form 10-K.
Previous wording
Net sales. Net sales for the three months ended March 31, 2026 were $79.0 million compared to $92.3 million for the three months ended March 31, 2025. Net sales by channel were as follows:
Current wording
Net sales. Net sales for the three months ended June 30, 2026 were $73.2 million compared to $97.7 million for the three months ended June 30, 2025. Net sales by channel were as follows:
Previous wording
Net sales in connected home were $28.3 million for the three months ended March 31, 2026 compared to $31.7 million for the three months ended March 31, 2025. This decrease is driven primarily by reduced demand from our large climate control and home automation customers.
Current wording
Net sales in connected home were $25.1 million for the three months ended June 30, 2026 compared to $34.1 million for the three months ended June 30, 2025. This decrease is driven primarily by reduced demand from our large climate control and home entertainment customers.
Previous wording
Net sales in home entertainment were $50.7 million for the three months ended March 31, 2026 compared to $60.6 million for the three months ended March 31, 2025. The decrease in sales within the home entertainment channel was primarily driven by lower demand for subscription broadcasting products in North America and Latin America, particularly for basic remote controls with lower price points and limited or no advanced features. The retail market also remains weak, reflecting elevated inventory levels and soft sell-through performance
Current wording
Net sales in home entertainment were $48.1 million for the three months ended June 30, 2026 compared to $63.6 million for the three months ended June 30, 2025. The decrease in sales within the home entertainment channel was primarily driven by lower demand for subscription broadcasting products, particularly for basic remote controls with lower price points and limited or no advanced features.
Previous wording
Gross profit. Gross profit for the three months ended March 31, 2026 was $20.6 million compared to $26.1 million for the three months ended March 31, 2025. Gross profit as a percentage of sales decreased to 26.1% for the three months ended March 31, 2026 from 28.3% for the three months ended March 31, 2025. The decline in gross margin was primarily driven by an unfavorable change in sales mix, which reduced margin by 170 basis points, and additional tariff costs that could not be passed on to customers, which reduced margin by 110 basis points. These pressures were partially offset by realized procurement savings, which improved gross margin by approximately 70 basis points.
Current wording
Gross profit. Gross profit for the three months ended June 30, 2026 was $25.9 million compared to $29.2 million for the three months ended June 30, 2025. Gross profit as a percentage of sales increased to 35.4% for the three months ended June 30, 2026 from 29.9% for the three months ended June 30, 2025. The improvement in gross margin was primarily driven by the sale of tariff claims and the associated mix impact, which contributed approximately 690 basis points and 160 basis points respectively, and improved management of inbound freight costs and other costs, which contributed approximately 90 basis points. These favorable impacts were partially offset by higher component costs driven by market conditions, which reduced gross margin by approximately 240 basis points, as well as the weaker U.S. dollar relative to the Chinese Renminbi, which had an adverse impact of approximately 150 basis points.
Previous wording
Research and development ("R&D") expenses. R&D expenses decreased to $5.5 million for the three months ended March 31, 2026 from $7.2 million for the three months ended March 31, 2025 attributable to reductions in payroll and related personnel expenses following headcount optimization actions.
Current wording
Research and development ("R&D") expenses. R&D expenses decreased to $4.3 million for the three months ended June 30, 2026 from $7.0 million for the three months ended June 30, 2025 attributable to reductions in payroll and related personnel expenses following headcount optimization actions.
Previous wording
Interest income (expense), net. Interest expense, net decreased to $0.1 million for the three months ended March 31, 2026 from $0.4 million for the three months ended March 31, 2025, as a result of a lower average loan balance and lower interest rates.
Current wording
Interest income (expense), net. Interest expense, net decreased to $0.2 million for the three months ended June 30, 2026 from $0.4 million for the three months ended June 30, 2025, as a result of a lower average loan balance and lower interest rates.
Previous wording
Other income (expense), net. Other income, net was $0.2 million for the three months ended March 31, 2026 compared to other income, net of $0.1 million for the three months ended March 31, 2025. This increase was attributable to a lower foreign currency losses incurred in the first quarter of 2026.
Current wording
Other income (expense), net. Other income, net was $1.8 million for the three months ended June 30, 2026 compared to other income, net of $1.8 million for the three months ended June 30, 2025. The amount was primarily attributable to foreign currency losses incurred in the second quarter of 2026.
Previous wording
Provision for income taxes. Income tax expense was $3.6 million for the three months ended March 31, 2026, relative to a pre-tax loss of $3.8 million, compared to income tax expense of $2.2 million for the three months ended March 31, 2025, relative to a pre-tax loss of $4.1 million. Consistent with 2025, we expect the U.S. to be in a pre-tax loss position without benefit for the full year 2026, resulting in an elevated effective tax rate.
Current wording
Provision for income taxes. Income tax expense was $1.1 million for the three months ended June 30, 2026, relative to a pre-tax loss of $2.8 million, compared to income tax expense of $1.8 million for the three months ended June 30, 2025, relative to a pre-tax loss of $1.1 million. Consistent with 2025, we expect the U.S. to be in a pre-tax loss position without benefit for the full year 2026, resulting in an elevated effective tax rate.
Previous wording
Selling, general and administrative ("SG&A") expenses. SG&A expenses decreased to $19.0 million for the three months ended March 31, 2026 from $22.6 million for the three months ended March 31, 2025. The decrease reflects lower volume-driven expenses of $0.3 million, consistent with the decline in sales volume. In addition, ongoing cost-reduction initiatives, including organizational rightsizing, resulted in savings from headcount reductions. People-related expenses decreased by $2.9 million, complemented by an additional $1.0 million reduction in other discretionary spending including travel expense. These savings were largely offset by $0.6 million of severance costs associated with our global reduction in force.
Current wording
Selling, general and administrative ("SG&A") expenses. SG&A expenses decreased to $35.8 million for the six months ended June 30, 2026 from $43.8 million for the six months ended June 30, 2025. The decrease reflects lower volume-driven expenses of $1.0 million, consistent with the decline in sales volume. In addition, ongoing cost-reduction initiatives, including organizational rightsizing, resulted in savings from headcount reductions. People-related expenses decreased by $6.5 million, complemented by an additional $1.7 million reduction in other discretionary spending including travel, rental expense and professional fees. These savings were partially offset by $0.6 million of severance costs associated with our global reduction in force and $0.5 million increase of reserve for uncollectible accounts receivable during the period.
Previous wording
Cash and cash equivalents– On March 31, 2026, we had $3.1 million, $7.8 million, $3.2 million, $10.0 million and $5.9 million of cash and cash equivalents in North America, the PRC, Asia (excluding the PRC), Europe, and South America, respectively. We attempt to mitigate our exposure to liquidity, credit and other relevant risks by placing our cash and cash equivalents with financial institutions we believe are high quality.
Current wording
Cash and cash equivalents– On June 30, 2026, we had $11.0 million, $8.9 million, $5.2 million, $4.3 million and $3.0 million of cash and cash equivalents in North America, the PRC, Asia (excluding the PRC), Europe, and South America, respectively. We attempt to mitigate our exposure to liquidity, credit and other relevant risks by placing our cash and cash equivalents with financial institutions we believe are high quality.
Previous wording
The U.S. Credit Line has a maximum availability of up to $60.0 million, subject to meeting certain financial conditions. Availability is based on "Borrowing Base", which is defined as 75% of accounts receivable aged less than 90 days less reserves for doubtful accounts and returns. The Borrowing Base is calculated monthly. At March 31, 2026, the U.S. Credit Line total availability was $47.9 million. At May 7, 2026, the U.S. Credit Line total availability was $41.1 million.
Current wording
The U.S. Credit Line has a maximum availability of up to $60.0 million, subject to meeting certain financial conditions. Availability is based on "Borrowing Base", which is defined as 75% of accounts receivable aged less than 90 days less reserves for doubtful accounts and returns. The Borrowing Base is calculated monthly. At June 30, 2026, the U.S. Credit Line total availability was $43.3 million. At August 5, 2026, the U.S. Credit Line total availability was $38.9 million.
Previous wording
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 $1.9 million at March 31, 2026 and $0.5 million at December 31, 2025. At March 31, 2026 and December 31, 2025, we had $4.4 million and $5.5 million outstanding under the U.S. Credit Line, respectively. At March 31, 2026, our remaining availability under our U.S. Credit Line was $41.6 million.
Current wording
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 $1.9 million at June 30, 2026 and $0.5 million at December 31, 2025. At June 30, 2026 and December 31, 2025, we had $0.0 million and $5.5 million outstanding under the U.S. Credit Line, respectively. At June 30, 2026, our remaining availability under our U.S. Credit Line was $41.4 million.
Previous wording
Our subsidiary, Gemstar Technology (Yangzhou) Co. Ltd. ("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"). As a continuation of the agreement, on July 30, 2025, we executed an amendment to the Line of Credit Agreement, which extends the term of the China Credit Line to July 16, 2026. We expect to renew our China Credit Line prior to its expiration; however, no assurance can be given that future financing will be available or, if available, that we will be offered terms satisfactory to us. The China Credit Line may be used for working capital purposes.
Current wording
Our subsidiary, Gemstar Technology (Yangzhou) Co. Ltd. ("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"). As a continuation of the agreement, on July 30, 2025, we executed an amendment to the Line of Credit Agreement, which extends the term of the China Credit Line to July 16, 2026. As a continuation of the agreement, on July 15, 2026, we executed an amendment to the Line of Credit Agreement, which extends the term of the China Credit Line to July 9, 2027. The China Credit Line may be used for working capital purposes. .
Previous wording
At March 31, 2026, the China Credit Line had a maximum availability of up to RMB 130.0 million (approximately $18.8 million), subject to meeting certain financial conditions.
Current wording
At June 30, 2026, the China Credit Line had a maximum availability of up to RMB 130.0 million (approximately $19.1 million), subject to meeting certain financial conditions.
Previous wording
The China Credit Line may be used for working capital purposes. 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 March 31, 2026 and December 31, 2025. At March 31, 2026, we had an outstanding balance of RMB 130.0 million (approximately $18.8 million) on our China Credit Line and no remaining availability.
Current wording
The China Credit Line may be used for working capital purposes. 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 June 30, 2026 and December 31, 2025. At June 30, 2026, we had an outstanding balance of RMB 80.0 million (approximately $11.8 million) on our China Credit Line and RMB 50.0 million (approximately $7.4 million) of availability under our China Credit Line.
Previous wording
Net cash used by operating activities was $0.8 million during the three months ended March 31, 2026 compared to $9.0 million provided by operating activities during the three months ended March 31, 2025. The decrease in operating cash flows primarily reflects changes in working capital, particularly in accounts receivable and contract assets and inventory. Net loss was $7.3 million for the three months ended March 31, 2026, compared to net loss of $6.3 million in the prior-year period. Depreciation and amortization expense was $3.1 million during the three months ended March 31, 2026 compared to $4.1 million during the three months ended March 31, 2025, primarily due to lower capital expenditures in recent years, consistent with the decline in production volumes. Inventories decreased by $9.8 million during three months ended March 31, 2026, compared to a decrease of $3.0 million during the same period in 2025, reflecting improved inventory management practices. A decrease in accounts receivable and contract assets, mainly due to lower sales, resulted in cash inflows of $2.8 million in the three months ended March 31, 2026 and $10.5 million in the three months ended March 31, 2025. Days sales outstanding improved to 79 days at March 31, 2026, from 83 days at March 31, 2025. A decrease in accounts payable and accrued liabilities, primarily driven by lower inventory purchases and timing of payments, resulted in cash outflows of $11.2 million during the three months ended March 31, 2026, compared to $5.3 million in the prior-year period.
Current wording
Net cash used by operating activities was $5.5 million during the six months ended June 30, 2026 compared to $17.7 million provided by operating activities during the six months ended June 30, 2025. The decrease in operating cash flows primarily reflects changes in working capital, particularly in accounts receivable, contract assets, and inventory. Net loss was $5.7 million for the three months ended June 30, 2026, compared to net loss of $9.2 million in the prior-year period. Depreciation and amortization expense was $6.2 million during the six months ended June 30, 2026 compared to $7.6 million during the six months ended June 30, 2025, primarily due to lower capital expenditures in recent years, consistent with the decline in production volumes. Inventories decreased by $8.1 million during six months ended June 30, 2026, compared to a decrease of $1.7 million during the same period in 2025, reflecting improved inventory management practices. A decrease in accounts receivable and contract assets, mainly due to lower sales, resulted in cash inflows of $6.5 million in the three months ended June 30, 2026 and $23.3 million in the three months ended June 30, 2025. Days sales outstanding were 77 days at June 30, 2026, compared to 75 days at June 30, 2025. A decrease in accounts payable and accrued liabilities, primarily driven by lower inventory purchases and timing of payments, resulted in cash outflows of $0.1 million during the six months ended June 30, 2026, compared to $15.4 million in the prior-year period.
Previous wording
Net cash used for investing activities during the three months ended March 31, 2026 was $1.2 million, of which $0.8 million and $0.4 million was used for capital expenditures and the development of patents, respectively. Net cash used for investing activities during the three months ended March 31, 2025 was $1.9 million, of which $1.0 million and $0.7 million was used for capital expenditures and the development of patents, respectively.
Current wording
Net cash used for investing activities during the six months ended June 30, 2026 was $2.3 million, of which $1.6 million and $0.7 million was used for capital expenditures and the development of patents, respectively. Net cash used for investing activities during the six months ended June 30, 2025 was $4.0 million, of which $2.3 million and $1.5 million was used for capital expenditures and the development of patents, respectively.
Previous wording
Future cash flows used for investing activities are largely dependent on the timing and amount of capital expenditures and the development of patents, respectively. We estimate that we will incur between $3.0 million and $5.0 million during the remainder of 2026.
Current wording
Future cash flows used for investing activities are largely dependent on the timing and amount of capital expenditures and the development of patents, respectively. We estimate that we will incur between $3.0 million and $4.0 million during the remainder of 2026.
Previous wording
Net cash used for financing activities was $1.1 million during the three months ended March 31, 2026 compared to $6.4 million during the three months ended March 31, 2025. The primary financing activities during the three months ended March 31, 2026 and 2025 were borrowings and repayments on our Credit Lines and repurchases of shares of our common stock. Net repayments on our Credit Lines were $1.1 million during the three months ended March 31, 2026 compared to $6.0 million during the three months ended March 31, 2025. During the three months ended March 31, 2026, we did not repurchase any of our common stock at March 31, 2026 compared to our repurchase of 41,000 shares at a cost of $0.4 million during the three months ended March 31, 2025.
Current wording
Net cash used for financing activities was $4.9 million during the six months ended June 30, 2026 compared to $7.7 million during the six months ended June 30, 2025. The primary financing activities during the six months ended June 30, 2026 and 2025 were borrowings and repayments on our Credit Lines and repurchases of shares of our common stock. Net repayments on our Credit Lines were $12.5 million during the six months ended June 30, 2026 compared to $7.0 million during the six months ended June 30, 2025. During the six months ended June 30, 2026, we did not repurchase any of our common stock at June 30, 2026 compared to our repurchase of 101,000 shares at a cost of $0.7 million during the six months ended June 30, 2025.
Rearranged current paragraphs (7)
Current report — wording carried from elsewhere
Selling, general and administrative ("SG&A") expenses. SG&A expenses decreased to $16.8 million for the three months ended June 30, 2026 from $21.2 million for the three months ended June 30, 2025. The decrease reflects lower volume-driven expenses of $0.6 million, consistent with the decline in sales volume. In addition, ongoing cost-reduction initiatives, including organizational rightsizing, resulted in savings from headcount reductions. People-related expenses decreased by $3.6 million, complemented by an additional $0.8 million reduction in other discretionary spending including travel expense and professional fees. These savings were partially offset by $0.6 million increase of reserve for uncollectible accounts receivable during the period.
Current report — wording carried from elsewhere
Net sales. Net sales for the six months ended June 30, 2026 were $152.3 million compared to $190.0 million for the six months ended June 30, 2025. Net sales by channel were as follows:
Current report — wording carried from elsewhere
Net sales in connected home were $53.4 million for the six months ended June 30, 2026 compared to $65.8 million for the six months ended ended June 30, 2025. This decrease is driven primarily by reduced demand from our large climate control and home entertainment customers.
Current report — wording carried from elsewhere
Net sales in home entertainment were $98.9 million for the six months ended June 30, 2026 compared to $124.2 million for the six months ended June 30, 2025. The decrease in sales within the home entertainment channel was primarily driven by lower demand for subscription broadcasting products, particularly for basic remote controls with lower price points and limited or no advanced features.
Current report — wording carried from elsewhere
Research and development ("R&D") expenses. R&D expenses decreased to $9.8 million for the six months ended June 30, 2026 from $14.2 million for the six months ended June 30, 2025 attributable to reductions in payroll and related personnel expenses following headcount optimization actions.
Current report — wording carried from elsewhere
Interest income (expense), net. Interest expense, net decreased to $0.3 million for the six months ended June 30, 2026 from $0.7 million for the six months ended June 30, 2025, as a result of a lower average loan balance and lower interest rates.
Current report — wording carried from elsewhere
Provision for income taxes. Income tax expense was $4.7 million for the six months ended June 30, 2026, relative to a pre-tax loss of $1.0 million, compared to income tax expense of $4.0 million for the six months ended June 30, 2025, relative to a pre-tax loss of $5.2 million. Consistent with 2025, we expect the U.S. to be in a pre-tax loss position without benefit for the full year 2026, resulting in an elevated effective tax rate.