Item 1. Business
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. As used herein, the terms "we", "us" and "our" refer to UEI and its subsidiaries unless the context indicates the contrary.
Additional information regarding UEI may be obtained at www.uei.com. Our website address is not intended to function as a hyperlink and the information available at our website address is not incorporated by reference into this Annual Report on Form 10-K. 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"). The SEC maintains a website at www.sec.gov that contains the reports, proxy and other information that we file electronically with the SEC.
Our business is comprised of one reportable segment. 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.
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.
Sales
We design, develop, manufacture, ship and support home entertainment control products, technology and software solutions, climate control solutions, wireless sensor 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. 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. These solutions are sold primarily to video service providers and consumer electronics original equipment manufacturer ("OEM") customers. 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. These products are primarily sold to OEM customers, as well as hotels, hospitality and system integrators. 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 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. 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. 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.
Over the past few years, our strategic focus has been towards 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.
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We serve a diverse range of markets, including consumer electronics, video services, climate control, security, home automation and hospitality. 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.
Our 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.
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. 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. Additionally, we sell our wireless control devices and AV accessories under the One For All ® , Ecolink ® and private label brand names to retailers in key markets, such as in the United States, United Kingdom, Germany, France and Spain. We utilize third-party distributors for the retail channel in countries where we do not have subsidiaries.
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.
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. 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. 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. With QuickSet and QuickSet Cloud, OEM customers can deliver seamless user experiences allowing consumers to switch easily between entertainment and smart home activities and reliably access and view content with a single touch. A QuickSet and QuickSet Cloud user experience can be delivered via a tactile remote, touchscreen interface, on-screen graphical user interface or voice-enabled system.
QuickSet's expanded functionality includes entertainment and whole home audio use cases to provide deeper device and content history across an ever-increasing landscape of devices and services in the home. The latest release of QuickSet, QuickSet homeSense, serves as a foundational block for home intelligence that learns and adapts to home environments to unlock personalized experiences in energy management, entertainment control and advertising. Our privacy-first approach in capturing user preferences across devices helps increase engagement through enhanced personalized recommendations for a better end-user experience.
QuickSet Widgets and QuickSet Widget Pro provide fully managed Internet of Things ("IoT") capability to non-connected electronic devices for fast time-to-market and enable digital transformation of end-user interaction. The multi-protocol modules enable advanced connectivity with dual-band Wi-Fi 6, Bluetooth 5.3 and support for Matter, Zigbee and Open Thread Border Router host services. They include native support of Matter across the QuickSet Widget family with Virtual Agent-assisted easy onboarding. This enables products powered by the QuickSet Widget including the UEI TIDE family of smart thermostats to be Cloud-ready and Matter-capable.
UEI Virtual Agent is, an innovative self-service support solution, that simplifies device onboarding by allowing customers to seamlessly hand-off the set-up process from a large screen (SmartTV) to a smaller one (mobile phone). Integrated into the latest version of QuickSet, UEI Virtual Agent provides automated steps for onboarding, feature discovery and troubleshooting
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capabilities and is available both as a web-based application and a TV app for integration into existing infrastructures. UEI Virtual Agent, when bundled with our newest set of UEI NetReady services for remote diagnostics and customer support, further enhance the support experience for products already deployed in the home.
Licensees of QuickSet and/or QuickSet Cloud products and support services, include service providers such as Comcast Corporation, Charter Communications, TiVo, DIRECTV and DISH Network Corporation; smart TV manufacturers such as Sony Group Corporation, LG Electronics and Samsung Electronics Co.; leading game console manufacturers Sony and Microsoft on their respective gaming consoles; and has grown to include HVAC and emerging home automation customers.
Our latest release of QuickSet, supporting device and content discovery, QuickSet homeSense and whole home audio, is currently in proof of concept evaluation on broadband gateway platforms from major telcos in the U.S. and Europe.
Our leading portfolio of home entertainment products include our Emmy ® award-winning voice remote controls that have become a staple of the home entertainment control industry. This technology, powered by our proprietary silicon platform, allows users to use voice to interact with their video services and content through the remote control while using low power RF standards, such as Bluetooth LE (BLE) and Zigbee to provide the bandwidth needed for voice transmission to the set-top box or television. We also ship ultra-low power SOCs for use in Samsung's flagship remote control to power their energy-harvesting photo-voltaic (PV) cells.
With our commitment to create environmentally sustainable solutions that do not compromise but enhance product performance, we offer UEI Eterna, a line of voice-enabled control solutions designed with our new generation of Extreme Low-Power System-on-Chip and energy harvesting technologies to deliver increased processing capability while using significantly less power compared to prior generations. The energy-harvesting version features our "Battery-4-Life" technology that relies on collecting energy from the environment's ambient light and radio frequencies to deliver a control solution that requires no battery replacement over the useful life of the product. Our ultra-low power remotes are now shipping with Liberty Global's latest video service platform offering.
Our UEI TIDE family, including UEI TIDE Dial, Touch and Bridge, have been developed and deployed as white label smart thermostat platforms under major HVAC OEMs, as well as, hospitality and smart home-branded customers. These products are designed to provide intelligent climate control solutions that enhance user comfort and energy efficiency through a complete energy management platform that seamlessly integrates with both central, hybrid and space HVAC systems. The platform is capable of supporting energy insight capabilities through our software-defined occupancy and presence detection technology, QuickSet homeSense, with recommendations to optimize cost and comfort for users. In addition, the UEI TIDE family products offer native cloud connectivity and feature our latest device management and lifecycle support services which simplify setup and control and allows interoperability with a variety of smart home devices and ecosystems. The smart thermostat line includes all the necessary connectivity technologies to address the evolving smart home, including seamless connection to the cloud over Wi-Fi plus local device connectivity via Bluetooth Smart, Zigbee and Infrared, and includes support for Matter, the industry's latest smart home connectivity standard. We continue to enhance our UEI TIDE family of products to provide enhancements and new features for the everchanging home environment.
In smart home, UEI Butler smart hubs, powered by QuickSet Cloud, align with our product and technology strategy to enable discovery, control and interaction across disparate connected devices in the home to create smarter living for a growing list of smart home B2B customers. This family of smart home hubs, complemented by our complete range of Zigbee sensors and accessories, enables customers to deliver tailored and managed experiences for their products while allowing for greater interoperability with other brands and ecosystems consumers have in their homes. The hubs bring interoperability covering a wide range of wireless protocols including legacy IR for entertainment and air conditioning devices, Zigbee, Bluetooth and IP devices, as well as, the fast-growing Matter-compatible device category.
Our full-featured hubs deliver seamless interoperability, including i) pre-integration support for a complete range of Zigbee sensors and thermostats to create tailored kits for energy management, climate control, smart lighting and more; ii) built-in Zigbee radios, powerful IR Blasters and support for Wi-Fi or ethernet configuration for flexible placement in any room in the home; iii) Matter bridging capability for control of non-matter devices via built-in iOS and Android home apps; iv) Matter controller and multi-admin capability to work alongside other Matter controllers for a seamless end-user experience, or to create a new Matter environment in a home; v) built-in support for nevo.ai virtual agent for a seamless onboarding experience, personalization and troubleshooting when help is needed; and vi) option for far-field voice to add hands-free control to any smart TV, streaming or cable/satellite set-top box or audio device.
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Our complete family of Butler Smart Home hubs leverage QuickSet Cloud’s powerful device discovery and configuration abilities, and work with any Zigbee-enabled nodes or UEI-developed sensors with complete rule-based automation and scene creation features.
In home security, safety and automation, we offer universal sub-gigahertz products that are compatible with the top security panel manufacturers, such as Honeywell, GE, Tyco/DSC and 2GIG. In the Do-It-Yourself ("DIY") residential security channel, we offer sensor-based products using industry standard Z-Wave and Zigbee protocols.
Markets and Competition
In recent years, we have seen a significant change in our markets with the rise of the direct-to-consumer streaming video apps that are enabled on smart TVs and streaming devices as well as advanced set-top boxes. This has resulted in a change in mix in our customer base, especially in the U.S., where our traditional customers in cable and satellite have been complemented with new customers in the digital media streaming domain. Today our portfolio includes universal control products compatible with Apple's tvOS and Google's AndroidTV platforms designed for the Multichannel Video Programming Distributor market allowing subscribers access to subscription-based channels through hybrid and Over the Top ("OTT") streaming platforms.
Additionally, some of our current customers have successfully introduced media streaming services and expanded their footprint to new end-users. 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. Additionally, these brands, along with our OEM customers in consumer electronics, such as LG with their WebOS, are expanding their customer footprints through distribution of their OS platforms that include our QuickSet technologies, allowing us to grow our global technology footprint and grow our licensing revenue in those channels.
At the same time, we have seen our markets in Home Entertainment OEM, and especially our smart TV OEMs, successfully upgrade to streaming service aggregators. The advanced TV interfaces on smart TVs and related streaming devices offer platforms for personalized advertising and smart home services which is expected to ensure demand for our wireless and wired control products, microcontrollers and software technology.
Over the past few years, the climate control industry has experienced a rise in demand due to the growing focus on the implementation of advanced HVAC equipment, such as heat pumps, driven by government subsidies and incentives aimed at promoting energy-efficient technologies. 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. Furthermore, our OEM customers are equally motivated to bring these cloud-connected capabilities to their thermostat products as the benefits gained in accessing system data for preventive and predictive maintenance of the HVAC systems, far outweigh the added investments in these more advanced (smart) thermostats.
Leveraging our scale and expertise in low-power RF microcontrollers, we continue to pursue further penetration of our traditional OEM consumer electronics markets as well as newer product categories in the smart home and IoT markets including smart lighting, smart and motorized shades, as well as smart toilets and faucets, which rely on smart connectivity and control technologies to reduce water use and improve user experience. Customers in these markets integrate our connectivity and cloud-based solutions, services and technology into their products to enhance their consumer lifestyle ecosystems. Growth in these markets has been driven by the increasing demand for more energy efficient homes, consumer convenience and the increasing proliferation of connected devices.
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. In the connected smart home market, we compete with the OEMs themselves as well as wireless manufacturers in North America, such as Nice, and several original design manufacturers in Asia, as well as technology system providers such as Tuya. In the home security, safety and automation market, we compete with offshore-based, original design and built-to-print hardware manufacturers, such as Leedarson and Xavi Technologies. In the international retail and private label markets for wireless controls we compete primarily with a variety of accessory trading and branding companies like Jasco and Hama, as well as various manufacturers of AV accessories in Asia.
We compete in our markets on the basis of product quality, enhanced features, intellectual property, local design and development expertise, local development support and end-user support for our OFA branded products. We believe that we will
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need to continue to introduce new and innovative products and software solutions to remain competitive and to recruit and retain competent personnel to successfully accomplish our future objectives.
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.
Our 25 domestic and international subsidiaries are the following:
• C.G. 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. Ltd., established in the PRC;
• Gemstar Technology (Yangzhou) Co. Ltd., established in the PRC;
• Guangzhou Universal Electronics Service Co., Ltd., established in the PRC;
• One For All France S.A.S., established in France;
• One For All GmbH, established in Germany;
• One For All Iberia S.L., established in Spain;
• One For All UK Ltd., established in the United Kingdom;
• Qinzhou Universal Trading Co. 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 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.
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.
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. These platforms are key to our ability to penetrate the climate control OEM market and our ability to introduce unique features and capabilities in these platforms to promote and demonstrate our differentiated features in customer-specific products.
Leading up to the International Consumer Electronics (CES) show in January 2025, our engineers worked on integrating, and demonstrating, new features on our UEI TIDE platforms, such as Matter, QuickSet homeSense, energy insights, and a device-based rules engine. We believe that these features were well received by existing and new customers and will serve us well for new design wins in 2025 and new product introductions in 2026 and beyond.
The expanded UEI TIDE family portfolio includes the UEI TIDE Dial, Touch and Bridge available in various SKUs to cater to different market needs. The UEI TIDE Dial (US24) and UEI TIDE Dial (EU24/EUUSB) models now support Zigbee Coordinator functionality, enabling a complete energy management platform seamlessly integrated with HVAC systems, energy
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insight capabilities, and new software-defined occupancy and presence detection technology, QuickSet homeSense. These models also offer Matter support, allowing for wide interoperability with major smart home ecosystems.
One of the key features of the UEI TIDE Family is its ability to manage both central and space HVAC systems, providing optimized climate control and energy savings. Users can control hybrid systems that mix central and mini-split systems from a single thermostat through support for IR, making it easier to manage the whole home climate. UEI TIDE Dial and Touch also support nevo ® .ai, our AI-powered agent that offers support for on-boarding, remote control and built-in tier 0 support, enhancing user convenience and control throughout the lifecycle of the product.
At CES, we also offered customers a sneak-peak at our next generation smart thermostat platform (UEI TIDE Pro). Built from the ground up with a new architecture, this upcoming platform will feature a larger, higher-resolution display, support for on-device AI processing, Thread and Open Thread Border Router (OTBR), and QuickSet 7 support with a built-in Matter Controller with Multi-Admin capabilities. The new platform will also introduce an advanced software framework, allowing for the development of operating system and graphical user interfaces under a limited power budget.
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. We released a host of unique QuickSet Cloud features such as QuickSet homeSense for occupancy and presence detection, video and audio content and app history, and support for Thread, as well as continued development initiatives around existing and emerging technologies, such as Zigbee 3.0, Bluetooth Smart, WiFi and Matter, a unifying, IP-based connectivity protocol built on proven technologies designed to connect smart home devices reliably and securely across disparate IoT ecosystems. We continued to evolve the capabilities of our service platform (UEI Virtual Agent) on our UEI TIDE and UEI Eterna product platforms for easier device onboarding, identification and troubleshooting.
As a contributor to the Matter specification, we continue to be an active participant in several working groups and Plugfest events to help bring the full interoperability potential of the Matter standard to market.
In general, our technical staff are involved in various industry organizations and bodies, which are in the process of setting standards for IR and RF communication and networking in the home. Our participation ensures comprehensive understanding of the technical specifications being developed that can affect the deployment and proliferation of future standards and technologies in the home.
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. Each year our device and content discovery control libraries and HVAC engine continue to grow across the smart home landscape, supporting common and emerging smart home and HVAC control protocols, including IR, HDMI-CEC, Bluetooth and its variants, Zigbee (Rf4CE), Z-Wave, Thread, Matter and IP networks.
Our HVAC engine includes software that delivers logic and sequence control of relays in smart thermostats for efficient operation of a variety of heating and cooling equipment such as heat pumps, single, dual and multi-fuel (gas, oil and electric) HVAC systems. 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 ship integrated circuits, on which our software and control libraries are embedded and that connect to our cloud services, directly to manufacturers for inclusion in their products. In addition, we license our software and technology to manufacturers.
Our technology also includes other remote controlled home entertainment devices and home automation control modules, as well as wired CEC and wireless IP control protocols commonly found on many of the latest HDMI and internet connected devices. Our proprietary software automatically detects, identifies and enables the appropriate control infrastructure for many home entertainment and automation devices in the home. Our libraries are continuously updated using knowledge captured
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directly from the original device or from the manufacturers' written specifications to ensure the accuracy and integrity of the libraries.
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 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. These registrations are valid for terms ranging up to 20 years and may be renewed as long as the trademarks continue to be used and are deemed by management to be important to our operations. While we follow the practice of obtaining patent, copyright and trademark registrations on new developments whenever advisable, in certain cases we have elected common law trade secret protection in lieu of obtaining such other protection.
Manufacturing and Supply
We are vertically integrated across design, development, and manufacturing. 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 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. 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. We continue to evaluate our global factory footprint to identify ways to operate more efficiently.
With regard to the potential for recent tariff activities related to our products sourced globally, our global supply chain team is actively monitoring, reviewing and assessing any potential impact to our products and supply chain across the world. 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. 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. We continually seek additional sources to reduce our dependence on our integrated circuit suppliers. To further manage our integrated system on a chip supplier dependence, we include microcontroller technology which incorporates non-volatile, reprogrammable flash memory in most of our products. Flash memory-based microcontrollers have shorter lead times than microcontrollers using other memory technologies and may be reprogrammed. This allows us flexibility to use a given component on many different products, has the added benefit of potentially reducing excess and obsolete inventory exposure and allows us to update our product functionality in the field. This diversification lessens our dependence on any one supplier and allows us to negotiate more favorable terms. Our largest integrated circuit supplier, Qorvo International Pte Ltd., provided 11.5% of our total inventory purchases in 2022. 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. We conduct operations utilizing a formal, documented quality management system to ensure that our products and services satisfy customer needs and expectations. 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. 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.
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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 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. In April 2024, we signed our Commitment Letter to the Science Based Targets Initiative ("SBTi"), showcasing our dedication to establishing an approved science based target for reducing greenhouse gas emissions.
We are committed to complying with applicable labor laws and regulations of the countries in which we operate and supporting ethical labor practices that do not infringe on human rights. We are a regular member of the Responsible Business Alliance ("RBA"), an industry coalition dedicated to driving sustainable value for workers in global supply chains, among other things. As a regular member of the RBA, we have adopted the RBA Code of Conduct, which establishes standards to ensure that working conditions are safe, that employees are treated with respect and dignity and that business operations are environmentally responsible and conducted ethically. The RBA Code of Conduct has been reflected in our employee policies and procedures. 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.
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. We require all major suppliers, as defined by the RBA, to complete the RBA self-assessment questionnaire. We engage third-party due diligence platforms to screen major suppliers for sustainability and ethics concerns. As part of our Quality Management System, we conduct on-site audits of our suppliers, as a part of our supplier onboarding and annual recertification process, to ensure quality and compliance across our supply chain. A key component of these audits is evaluating alignment with the RBA VAP Standard. 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. Our Supplier Code of Conduct sets forth our global expectations in the areas of fair dealing, legal compliance, business integrity, labor practices, health and safety and environmental management. Among other things, we require our suppliers to respect human rights and to not engage in any form of involuntary or forced labor and to fully comply with all laws and regulations pertaining to the appropriate and dignified treatment of all workers.
Our Global Human Rights Policy is aligned with internationally recognized human rights principles defined by the Universal Declaration of Human Rights and the United Nations Guiding Principles on Business and Human Rights. We provide training to all employees to help identify and report any signs of forced labor or other unlawful labor practices. We have a third-party confidential ethics hotline ("the UEI Ethics Line") to enable our employees or other stakeholders to anonymously report any suspected violations of applicable laws, policies or human rights violations. We are committed to investigating all communications received on the UEI Ethics Line.
Government Regulation and Environmental Matters
Many of our products are subject to various federal, state, local and international laws governing chemical substances in products, including laws regulating the manufacturing and distribution of chemical substances and laws restricting the presence of certain substances in electronics products. We may incur substantial costs, including cleanup costs, fines and civil or criminal sanctions, third-party damages, or personal injury claims, if we were to violate or become liable under environmental laws or if our products become non-compliant with environmental laws. We also face increasing complexity in our product design and procurement operations as we adjust to new and future requirements relating to the material composition of our products.
We may also face significant costs and liabilities in connection with product take-back and "right to repair" legislation both in the U.S. and abroad. For example, the European Union's Waste Electrical and Electronic Equipment ("WEEE") Directive makes producers of electrical goods financially responsible for specified collection, recycling, treatment, and disposal of past and future covered products. Our European subsidiaries are WEEE compliant.
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. 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
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did not materially affect our earnings, financial condition or competitive position. In addition, during the same period, the costs incurred in complying with other applicable government regulations likewise did not materially affect our earnings, financial condition or competitive position. 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. 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. In other regions, we also need to comply with our customers' specific requirements relating to the non-use of certain hazardous substances in the products, which are typically equally or more stringent than the RoHS directive. 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 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. 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 deploy a low energy IR-engine in some of our products, which can extend battery life regardless of the protocols utilized by the product. We have introduced our control platform and related technologies that address the growing demand for sustainable products that reduce energy use and eliminate waste. With this platform, we partnered with technology leaders and invested in bringing ultra-low power connectivity chips with built-in energy harvesting and photovoltaic cells to the market. These chips offer more computing power while consuming substantially less battery power. In addition, to reduce energy consumption even further, we have introduced solutions powered by low-light solar cells for the entertainment remote control and IoT markets.
We also offer a product refurbishment program to our customers where we reclaim, refurbish and recycle pre-owned remote controls. Under this program, major components in pre-owned remote control units are reused or recycled. For example, the printed circuit board assemblies ("PCBA") are cleaned, tested and reused, or plastics are reground to be reused. We have also employed new master carton packing methods to increase shipping efficiency and reduce cardboard usage. Some of our manufacturing facilities are switching to the use of recycled solder. To further reduce collateral waste, we have introduced an initiative to reduce and/or remove single use plastics ("SUP") from our supply chain and manufacturing process for certain customer programs.
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. 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. 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. These measures, if fully implemented, will increase costs for certain goods imported into the United States.
Climate Change
Our operations, supply chain and products are expected to become increasingly subject to federal, state, local and foreign laws, regulations, and international treaties relating to climate change, such as climate disclosure, carbon pricing or product energy efficiency requirements. 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 believe that technology will be fundamental to finding solutions to achieve compliance with and manage those requirements. Our Board of Directors (the "Board"), specifically the Corporate Governance, Sustainability and Nominating Committee, is responsible for risk oversight, which includes relevant environmental-related risks such as climate change.
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.
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Human Capital
As of December 31, 2024, we employed 3,838 members of staff across our worldwide facilities. 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.
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. These third-party agencies have been required to adhere to both the relevant RBA Code of Conduct requirements and our own Supplier Code of Conduct, which among other things, prohibits the use of forced labor and sets forth requirements on fair dealing, legal compliance, business integrity, labor practices, health and safety and environmental management. We have also standardized the qualification, contract and monitoring standards for all third-party agencies.
Employee Recruitment, Retention, and Development
We provide and maintain a work environment that is designed to attract, develop and retain top talent through offering our employees an engaging work experience that contributes to their career development. We recognize that our success is based on the collective talents and dedication of those we employ. Talent management is critical to our ability to execute our long-term growth strategy, and we utilize both internal human resource personnel and external recruiting firms to identify and attract such talent. Through our history of technological innovation, we appreciate the importance of retention, growth and development of our employees. We regularly collect feedback from employees to better understand and improve their experiences and identify opportunities to continually strengthen our culture. Due to the nature of our activities, we tend to heavily invest in engineering capital, employing highly skilled and specialized engineers and technicians in the areas of electronics, RF design, software, cloud, mechanical, industrial design, manufacturing and quality disciplines.
Our staff is located around the globe at different office and development locations. 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.
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.
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. We encourage any employee who believes they are the subject of discrimination, harassment or retaliation to express concerns without fear of retribution or retaliation to their immediate supervisors, any senior-level managers, or through the UEI Ethics Line. In addition, we have maintained and enforced a Code of Conduct that applies to all of our employees, including our Chief Executive Officer, Chief Financial Officer, and Principal Accounting Officer, and to each member of the Board. The Code of Conduct is available in the Investor Relations section of our website (UEI.com/investor) by clicking on "Investor", then "Governance" and then "Committee composition, documents and confidential ethics line". We intend to post on that website any future changes or amendments to our Code of Conduct, and any waiver of our Code of Conduct that applies to any of our executive officers or a member of our Board within four business days following the date of the amendment or waiver.
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. 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.
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These workers represent approximately 17.0% of our 3,838 employees as of December 31, 2024. Our business units are subject to various laws and regulations relating to their relationships with their employees. These laws and regulations are specific to the location of each business unit. We believe that our relationships with employees and their representative organizations are good.
Safety, Health and Wellness
The health and safety of our employees, contractors, visitors and the communities in which we operate is paramount. We are committed to reducing or eliminating health and safety risks through our health and safety programs, including effective control measures, emergency response plans and training programs. We continually monitor and evaluate health and safety performance against established goals and industry standards and maintain clear procedures for collecting information about health and safety incidents, near misses, and concerns. Each incident is thoroughly investigated, and corrective actions are taken to prevent their recurrence. These metrics are communicated to leadership through regular management reviews. This commitment is outlined in our global health and safety policy. As a member of RBA, we also adhere to the standards of the RBA Code of Conduct to ensure working conditions are safe throughout our supply chain.
Seasonality
Historically, our business has been influenced by the retail sales cycle, with increased sales in the second half of the year. 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. Ammari 59 Senior Vice President, Corporate Planning and Strategy
Richard K. Carnifax 38 Senior Vice President, Global Operations
David Chong 63 Executive Vice President, Global Sales
Richard A. Firehammer, Jr. 67 Senior Vice President, General Counsel, Head of Global Compliance, and Corporate Secretary
Paul D. Arling is our Chairman and Chief Executive Officer. He joined us in May 1996 as Chief Financial Officer and was named to our Board of Directors in August 1996. He was appointed President and Chief Operating Officer in September 1998, was promoted to Chief Executive Officer in October 2000 and appointed as Chairman in July 2001. At the 2024 Annual Meeting of Stockholders, Mr. Arling was re-elected as our Chairman to serve until the 2025 Annual Meeting of Stockholders. From 1993 through May 1996, he served in various capacities at LESCO, Inc., a manufacturer and distributor of professional turf care products. Prior to LESCO, he worked for Imperial Wallcoverings, a manufacturer and distributor of wall covering products as Director of Planning, and The Michael Allen Company, a strategic management consulting company where he was employed as a management consultant. Mr. Arling received his Bachelor of Science and Master of Business Administration from The Wharton School of the University of Pennsylvania.
Bryan M. Hackworth is our Senior Vice President and Chief Financial Officer. He was promoted to Chief Financial Officer in August 2006. Mr. Hackworth joined us in June 2004 as Corporate Controller and subsequently assumed the role of Chief Accounting Officer in May 2005. Before joining us in 2004, he spent five years at Mars, Inc., a privately held international manufacturer and distributor of consumer products and served in several financial and strategic roles. Prior to joining Mars, Inc., Mr. Hackworth spent six years at Deloitte & Touche LLP as an auditor, specializing in the manufacturing and retail industries. Mr. Hackworth is a certified public accountant (inactive) in the state of California and holds a Bachelor of Arts in Economics from University of California, Irvine.
Ramzi S. Ammari is our Senior Vice President, Corporate Planning and Strategy. He joined us in June 1997 as a Project Manager and has held various positions of increasing responsibility within our organization until being named to his current position in October 2013. He has global responsibility for the Company's technology innovation roadmap; driving new product initiatives; directing and implementing strategic partnerships, joint ventures and acquisitions; and recommending new avenues for business creation. Prior to joining us, Mr. Ammari worked at Mitsubishi Consumer Electronics of America for four years as
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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 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. 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. From November 2015 until September 2017, he held various operational roles at Air Enterprises, a privately held manufacturer of specialty air handling equipment. Prior to joining Air Enterprises, Mr. Carnifax spent four years scheduling and planning materials for Howden, a provider of high-quality air and gas handling products and services to the power, oil and gas, mining and petrochemical industries. Mr. Carnifax holds a Bachelor of Arts in Political Science and a Master of Arts in International Relations/Business from the University of Akron.
David Chong is our Executive Vice President, Global Sales. He was previously responsible for the general management and sales of our Asia region and was promoted to his current position in October 2023. Mr. Chong joined us in January 2009 as Senior Vice President of Global OEM Sales. Prior to joining us, Mr. Chong served as Senior Vice President at Philips Consumer Electronics Division and as the Chief Marketing Officer of the business group Philips Display (Philips TV and computer monitor business). At Philips Display, he led the re-engineering of the Product Creation, Marketing and Sales Organization to compete successfully in the LCD TV space. Prior to this, he also served as Vice President and General Manager of the Audio Video Business in Asia, Vice President and Global Business Line Manager for Audio and various senior management positions at Philips' CE Division. Mr. Chong started at Philips Research Lab in 1984 as a research scientist working in the area of VLSI design methodologies. He also served as Managing Director for Asia at InVue Security Product before joining us. Mr. Chong had his senior education in the United Kingdom, holding a Bachelor of Science in Electrical and Electronics Engineering with High Honors from University of Nottingham.
Richard A. Firehammer, Jr., Esq. is our Senior Vice President, General Counsel, Head of Global Compliance, and Corporate Secretary. He joined us in October 1993 as General Counsel. He became our Corporate Secretary in February 1994. He was our Vice President from May 1997 until August 1998, and served as counsel to us from September 1998 until February 1999, at which time he was promoted to Senior Vice President. In January 2022, in addition to his duties as General Counsel and Secretary, he took on the added responsibilities as Head of Global Compliance. From November 1992 to September 1993, he was associated with the Chicago, Illinois law firm, Shefsky & Froelich, Ltd. From 1987 to 1992, he was with the law firm Vedder, Price, Kaufman & Kammholz in Chicago, Illinois. He received his Bachelor of Science in Accounting from Indiana University and a Juris Doctor degree from Whittier College School of Law. Mr. Firehammer is also a certified public accountant (inactive).