Universal Electronics UEIC Form 10-Q filing Q2 FY2026

Page Number

PART I. FINANCIAL INFORMATION 3

Item 1. Consolidated Financial Statements (Unaudited) 3

Consolidated Balance Sheets 3

Consolidated Statements of Operations 4

Consolidated Statements of Comprehensive Income (Loss) 5

Consolidated Statements of Stockholders' Equity 6

Consolidated Statements of Cash Flows 8

Notes to Consolidated Financial Statements 9

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 28

Item 3. Quantitative and Qualitative Disclosures About Market Risk 34

Item 4. Controls and Procedures 35

PART II. OTHER INFORMATION 35

Item 1. Legal Proceedings 35

Item 1A. Risk Factors 35

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 36

Item 5. Other Information 36

Item 6. Exhibits 37

Signatures 38

PART I. FINANCIAL INFORMATION

ITEM 1. Consolidated Financial Statements (Unaudited)

The accompanying notes are an integral part of these consolidated financial statements.

The accompanying notes are an integral part of these consolidated financial statements.

The accompanying notes are an integral part of these consolidated financial statements.

UNIVERSAL ELECTRONICS INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(In thousands)

(Unaudited)

The following summarizes the changes in total equity for six months ended June 30, 2026:

The following summarizes the changes in total equity for six months ended June 30, 2025:

The accompanying notes are an integral part of these consolidated financial statements.

The accompanying notes are an integral part of these consolidated financial statements.

UNIVERSAL ELECTRONICS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026

(Unaudited)

Note 1 — Basis of Presentation

In the opinion of management, the accompanying consolidated financial statements of Universal Electronics Inc. and its subsidiaries contain all the adjustments necessary for a fair presentation of financial position, results of operations and cash flows for the periods presented. All such adjustments are of a normal recurring nature, except for the restructuring charges, monetization of IEEPA tariff refund claims, and re-acquisition of assets held for sale, as described in Notes 12, 8, and 19, respectively to the consolidated financial statements. Information and footnote disclosures normally included in financial statements, which are prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"), have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). As used herein, the terms "Company", "UEI," "we," "us," and "our" refer to Universal Electronics Inc. and its subsidiaries, unless the context indicates to the contrary.

Our results of operations for the three and six months ended June 30, 2026, are not necessarily indicative of the results to be expected for the full year. These financial statements should be read in conjunction with the "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Quantitative and Qualitative Disclosures About Market Risk," and the "Financial Statements and Supplementary Data" included in Items 1A, 7, 7A, and 8, respectively, of our Annual Report on Form 10-K for the year ended December 31, 2025.

Estimates and Assumptions

The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. On an on-going basis, we evaluate our estimates and assumptions, including those related to revenue recognition, allowance for credit losses, inventory valuation, impairment of long-lived assets and intangible assets, business combinations, income taxes and related valuation allowances and stock-based compensation expense. Actual results may differ from these assumptions and estimates, and they may be adjusted as more information becomes available. Any adjustment may be material.

Summary of Significant Accounting Policies

With the exception of the following policy, our significant accounting policies are unchanged from those disclosed in Note 2 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2025.

Significant Accounting Policy Updates

IEEPA Tariff Refund Claims/ Monetization of Tariff refund claims

During the first quarter of 2026, the U.S. Supreme Court ruled that tariffs imposed under the International Emergency Economic Powers Act (“IEEPA”) were unlawful and therefore invalid. As a result, the Company intended to seek reimbursement from the US Customs and Border Protection ("CBP") for IEEPA tariffs paid during calendar years 2025 and 2026.

The Company has applied the loss recovery guidance under FASB ASC 450 – Contingencies to account for the recognition of these claims. Any future recovery of tariff refund claims will be recognized as a receivable when the claim becomes probable and will be reflected as a reduction of Cost of goods sold for inventory previously sold, or as a reduction of inventory for goods that remain unsold. In the first quarter of 2026, the Company did not recognize an asset for recovery of tariff refund claims based on available information at that time, and considered recovery was not probable. As of the end of the second quarter of 2026, following a reassessment of the facts and circumstances, management concluded that recovery of the tariff refund claims had become probable. Accordingly, the Company recognized an asset for the expected recovery of the tariff refund claims.

During the second quarter of 2026, the Company entered into the Tariff Claim Agreement with a third-party financial institution ("Buyer") to monetize its claims for refunds of tariffs previously paid to CBP in consideration for the Purchase Price (as defined below), which reflects a discount to the aggregate amount payable by CBP pursuant to the Claims (as defined below) as mutually agreed between the Company and Buyer. The monetization of tariff refund claims was accounted for in accordance with FASB ASC 470 – Debt and presented as a short-term financing on the consolidated balance sheet.

UNIVERSAL ELECTRONICS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026

(Unaudited)

Recently Adopted Accounting Pronouncements

In July 2025, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update ("ASU") 2025-05, "Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets". This guidance allows entities to elect a practical expedient that assumes that the current conditions as of the balance sheet date do not change for the remaining life of the asset. This guidance is effective for annual periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. The guidance is to be applied on a prospective basis, with early adoption permitted. The Company adopted this standard on a prospective basis for the year beginning January 1, 2026 and elected the practical expedient allowed by ASU. The adoption of this ASU is not expected to have a material impact on our consolidated financial statements and disclosures.

Accounting Pronouncements Not Yet Effective

In November 2024, the FASB issued ASU 2024-03, "Income Statement – Reporting Comprehensive Income (Topic 220): Disaggregation of Income Statement Expenses." This guidance requires additional disclosures by disaggregating the costs and expense line items that are presented on the face of the consolidated statements of operations. This guidance is effective for annual periods beginning in 2027 and interim periods beginning in 2028, with early adoption permitted. This guidance requires a public company to apply the amendments either prospectively to financial statements issued for reporting periods after the effective date of this ASU or retrospectively to any or all prior periods presented in the financial statements. We are currently evaluating the impact of adopting this guidance on our disclosures.

In September 2025, the FASB issued ASU 2025-06, "Intangibles-Goodwill and Other-Internal Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software". This guidance removes all references to software development project stages so that the guidance is neutral to different software development methods. Therefore, under the ASU, software capitalization will begin when management has authorized and committed to funding the software project and when it is probable that the project will be completed and the software will be used to perform the function intended. This guidance is effective for annual periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. The guidance is to be applied on a prospective basis, or on a modified transition approach or a retrospective transition approach, with early adoption permitted. We are currently evaluating the impact of adopting this guidance on our consolidated financial statements and disclosures

We have assessed all other ASUs issued but not yet adopted and concluded that those not disclosed are not relevant to the Company or are not expected to have a material impact.

UNIVERSAL ELECTRONICS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026

(Unaudited)

Note 2 — Cash and Cash Equivalents

Cash and cash equivalents were held in the following geographic regions:

Note 3 — Revenue and Accounts Receivable, Net

Revenue Details

The pattern of revenue recognition was as follows:

Our net sales to external customers by channel were as follows:

(1) The connected home channel represents climate control, smart home and security product sales sold primarily to HVAC, security, home automation and home appliance customers.

(2) The home entertainment channel represents entertainment-related product sales sold primarily to video service providers, consumer electronics original equipment manufacturers ("OEMs") and retailers. It also includes sales associated with intellectual property licensing and our cloud-based software solution.

Our net sales to external customers by geographic area were as follows:

Specific identification of the customer billing location was the basis used for attributing revenues from external customers to geographic areas.

UNIVERSAL ELECTRONICS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026

(Unaudited)

Accounts Receivable, Net

Accounts receivable, net were as follows:

(1) Other accounts receivable is primarily comprised of supplier, supplier rebate and interest receivables.

(2) Accounts receivable, net at December 31, 2024, was $114.2 million.

Allowance for Credit Losses

Changes in the allowance for credit losses were as follows:

Contract Assets

Contract assets were $8.4 million and $8.1 million at June 30, 2026 and December 31, 2025, respectively. The change in balances between periods is due to the fluctuation of custom product inventory balances for which we have an enforceable right to payment for performance completed to date.

Contract Liabilities

We have current and non-current contract liability balances primarily consisting of cash received in advance of providing our cloud-based software services. Contract liabilities are included within other accrued liabilities and other long-term liabilities in our consolidated balance sheets.

Changes in the carrying amount of contract liabilities were as follows:

UNIVERSAL ELECTRONICS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026

(Unaudited)

Significant Customers

Net sales to the following customers totaled more than 10% of our net sales:

Trade receivables associated with significant customers that totaled more than 10% of our accounts receivable, net was as follows:

(1) Trade receivables associated with this customer did not total more than 10% of our accounts receivable, net for the indicated period.

Note 4 — Inventories

Inventories were as follows:

Significant Supplier

There were no purchases from suppliers that totaled more than 10% of our total inventory purchases for the three and six months ended June 30, 2026, and 2025.

There were no trade payable balances to suppliers that totaled more than 10% of our total accounts payable at June 30, 2026, and December 31, 2025, respectively.

UNIVERSAL ELECTRONICS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026

(Unaudited)

Note 5 — Long-lived Tangible Assets

Long-lived tangible assets by geographic area, which include property, plant, and equipment, net ("PP&E") and operating lease right-of-use assets, were as follows:

PP&E are shown net of accumulated depreciation of $170.0 million and $163.7 million at June 30, 2026 and December 31, 2025, respectively.

Depreciation expense was $1.8 million and $2.4 million for the three months ended June 30, 2026 and 2025, respectively. Depreciation expense was $3.7 million and $5.1 million for the six months ended June 30, 2026 and 2025, respectively.

Note 6 — Intangible Assets, Net

Intangible Assets, Net

The components of intangible assets, net were as follows:

(1) This table excludes the gross value of fully amortized intangible assets totaling $52.6 million and $52.5 million at June 30, 2026 and December 31, 2025, respectively.

Amortization expense is recorded in selling, general and administrative expenses, except amortization expense related to capitalized software development costs, which is recorded in cost of sales. Amortization expense by statement of operations caption was as follows:

UNIVERSAL ELECTRONICS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026

(Unaudited)

Estimated future annual amortization expense related to our intangible assets at June 30, 2026, was as follows:

Note 7 — Leases

We have entered into various operating lease agreements for automobiles, offices and manufacturing facilities throughout the world. At June 30, 2026, our operating leases had remaining lease terms of up to 34 years, including any reasonably probable extensions.

Lease balances within our consolidated balance sheets were as follows:

Operating lease expense, operating lease cash flows and supplemental cash flow information were as follows:

The weighted average remaining lease liability term and the weighted average discount rate were as follows:

The following table reconciles the undiscounted cash flows for each of the next five years and thereafter to the operating lease liabilities recognized in our consolidated balance sheets at June 30, 2026. The reconciliation excludes short-term leases that are not recorded in our consolidated balance sheets.

UNIVERSAL ELECTRONICS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026

(Unaudited)

At June 30, 2026, we did not have any operating leases that had not yet commenced.

Note 8 — Lines of Credit

U.S. Line of Credit

Our Second Amended and Restated Credit Agreement, as amended ("Second Amended Credit Agreement") with U.S. Bank National Association ("U.S. Bank") provides for a revolving line of credit ("U.S. Credit Line") through September 30, 2027. The U.S. Credit Line may be used for working capital and other general corporate purposes including acquisitions, share repurchases and capital expenditures.

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.

Amounts available for borrowing under the U.S. Credit Line are reduced by the balance of any outstanding letters of credit, of which there was $1.9 million at June 30, 2026 and $0.5 million at December 31, 2025.

All obligations under the U.S. Credit Line are secured by substantially all of our U.S. personal property and tangible and intangible assets, as well as a guaranty of the U.S. Credit Line by our wholly-owned subsidiary, Universal Electronics BV.

Under the Second Amended Credit Agreement, we pay interest on the U.S. Credit Line based on the Secured Overnight Financing Rate ("SOFR") plus a 3.00% margin. The Second Amended Credit Agreement also contains a facility fee of 0.25%. The interest rates in effect at June 30, 2026 and December 31, 2025 were 6.75% and 6.65%, respectively.

The Second Amended Credit Agreement includes financial covenants and contains other customary affirmative and negative covenants and events of default. Our covenants are based upon a minimum fixed charge coverage ratio and a maximum cash flow leverage ratio. We were in compliance with the covenants and conditions of the Second Amended Credit Agreement at June 30, 2026.

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. Our total interest expense on borrowings under the U.S. Credit Line was $0.2 million and $0.5 million during the three months ended June 30, 2026 and 2025, respectively. Our total interest expense on borrowings under the U.S. Credit Line was $0.4 million and $1.1 million during the six months ended June 30, 2026 and 2025, respectively. Our total facility fee expense under the U.S. Credit Line was $28 thousand and $47 thousand during the three months ended June 30, 2026 and 2025, respectively. Our total facility fee expense under the U.S. Credit Line was $65 thousand and $94 thousand during the six months ended June 30, 2026 and 2025, respectively.

UNIVERSAL ELECTRONICS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026

(Unaudited)

China Line of Credit

In August 2024, our subsidiary, Gemstar Technology (Yangzhou) Co. Ltd. ("GTY"), executed a Line of Credit Agreement (the "Line of Credit Agreement") with the Bank of China, which provides for a revolving line of credit (the "China Credit Line"). 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.

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.

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.

All obligations under the China Credit Line are secured by GTY's buildings and land use rights.

Under the Line of Credit Agreement, we pay interest on the China Credit Line based on the one-year rate from the National Interbank Funding Center less a 0.1% margin. There are no associated commitment fees on the China Credit Line. The interest rates in effect at June 30, 2026 and December 31, 2025 were 2.90% and 2.92%, respectively.

The Line of Credit Agreement includes financial covenants and contains other customary affirmative and negative covenants and events of default. Our covenants are based on a debt to asset ratio and a dividends paid to net income ratio. We were in compliance with the covenants and conditions of the Line of Credit Agreement at and during the three months ended June 30, 2026.

At June 30, 2026 and December 31, 2025, we had RMB 80.0 million (approximately $11.8 million) and RMB 130.0 million (approximately $19.1 million), respectively, outstanding under the China Credit Line. At June 30, 2026, we had RMB 50.0 million (approximately 7.4 million) of availability under our China Credit Line. Our total interest expense on borrowings under the China Credit Line was RMB 0.9 million (approximately $0.1 million) and RMB 0.6 million (approximately $0.1 million) during the three months ended June 30, 2026 and 2025, respectively. Our total interest expense on borrowings under the China Credit Line was RMB 1.9 million (approximately $0.3 million) and RMB 1.2 million (approximately $0.2 million) during the six months ended June 30, 2026 and 2025, respectively.

Monetization of IEEPA Tariff Refund Claims

On June 9, 2026, the Company entered into a Claim Sale and Purchase Agreement (the "Tariff Claim Agreement") with a third party financial institution ("Buyer") pursuant to which the Company agreed to sell, grant and convey to Buyer all of the Company’s and its affiliates’ claims, interests and causes of action, and all related rights, distributions, amounts, payments related thereto and other proceeds thereof, including without limitation any interest thereon and other amounts paid or reimbursed in relation thereto, directly arising from or relating to tariffs previously paid by the Company or its affiliates to Customs and Border Protection (“CBP”) in connection with tariffs originally invoked under the International Emergency Economics Powers Act (“IEEPA”), for which such tariffs were ruled unlawful by the United States Supreme Court on February 20, 2026 (the "Claims"), in consideration for a payment of approximately $7.6 million (the "Purchase Price"). The Purchase Price reflects a discount to the aggregate amount payable by CBP pursuant to the Claims as mutually agreed between the Company and Buyer and is subject to full or partial refund, together with interest, under certain circumstances in which the Claims may be impaired. The Company is subject to certain post-closing cooperation obligations with Buyer with respect to the Claims.

The Company has received a total of $8.8 million, including interest, from CBP as of August 6, 2026.

The monetization of the Company`s tariff refund claims were accounted for in accordance with FASB ASC 470 – Debt and presented as a short-term financing on the consolidated balance sheet. As of June 30, 2026, the unamortized financing costs amounted to $1.3 million. The costs are being amortized through the expected settlement date of the claim and recorded in

UNIVERSAL ELECTRONICS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026

(Unaudited)

Interest income (expense) on the consolidated statements of operations. Refer to “Note 1. Basis of Preparation" for related accounting policy update on tariff refund claims.

In connection with the expected recovery of IEEPA tariffs, the Company evaluated its contractual and customary business practices with customers and concluded that a portion of the expected recovery is likely to be refunded to certain customers. These anticipated customer refunds represent consideration payable to customers under ASC 606, Revenue from Contracts with Customers, and therefore reduce the transaction price associated with the related customer contracts. Accordingly, the Company recorded an estimated liability of approximately $3.9 million as of June 30, 2026 for expected tariff refunds payable to customers, with a corresponding reduction of net sales in the period.

Note 9 — Income Taxes

We recorded income tax expense of $1.1 million and $1.8 million for the three months ended June 30, 2026 and 2025, respectively. We recorded income tax expense of $4.7 million and $4.0 million for the six months ended June 30, 2026 and 2025, respectively. The difference between the Company’s effective tax rate and the 21.0% U.S. federal statutory rate for the three months ended June 30, 2026 primarily related to the mix of pre-tax income and loss among jurisdictions and permanent tax items including a tax on net controlled foreign corporation tested income. The Company's income tax provision can be affected by other factors, including changes in tax laws and regulations in the jurisdictions in which we operate, changes in the valuation allowances on deferred tax assets, and other discrete items.

At December 31, 2025, we assessed the realizability of the Company's deferred tax assets by considering whether it is more likely than not some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. We considered the scheduled reversal of deferred tax liabilities, tax planning strategies, and projected future income in making this assessment. At December 31, 2025, we had a three-year world wide cumulative pre-tax loss and have accordingly provided a full valuation allowance on our U.S. federal and state deferred tax assets and on certain foreign deferred tax assets. During the three months ended June 30, 2026, there was no change to our valuation allowance position.

Uncertain Tax Positions

At June 30, 2026, we had gross unrecognized tax benefits of approximately $3.8 million including interest and penalties, which, if not for the valuation allowance recorded against the state Research and Experimentation income tax credit, would affect the annual effective tax rate if the tax benefits are realized. We have classified uncertain tax positions as non-current income tax liabilities unless they are expected to be paid within one year.

Interest and penalties

We have elected to classify interest and penalties as a component of tax expense. Accrued interest and penalties are immaterial at June 30, 2026 and December 31, 2025 and are included in the unrecognized tax benefits.

Enactment of H.R.1

On July 4, 2025, H.R. 1, commonly referred to as the One Big Beautiful Bill Act, was enacted in the United States H.R. 1 includes significant provisions, including the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act of 2017, modifications to the U.S. international tax framework, and the restoration of favorable tax treatment for certain business provisions. This legislation has multiple effective dates, with certain provisions that became effective in 2025 and others to be implemented in 2026 and 2027. Due to the U.S. valuation allowance position, the legislation is not expected to have a material impact on the Company's estimated annual effective tax rate or cash tax position.

UNIVERSAL ELECTRONICS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026

(Unaudited)

Note 10 — Accrued Compensation

The components of accrued compensation were as follows:

(1) As of December 31, 2025, this includes $0.8 million of accrued severance expenses related to our 2025 restructuring plan and global reduction in force. As of June 30, 2026, this includes $0.1 million of accrued severance expenses related to our 2025 restructuring plan and global reduction in force.

(2) PRC employers are required by law to remit the applicable social insurance payments to their local government. Social insurance is comprised of various components such as pension, medical insurance, job injury insurance, unemployment insurance, and a housing assistance fund, and is administered in a manner similar to social security in the United States. This amount represents our estimate of the amounts due to the PRC government for social insurance on June 30, 2026, and December 31, 2025.

Note 11 — Other Accrued Liabilities

The components of other accrued liabilities were as follows:

(1) This amount relates to the judgment of a lawsuit with an employment agency in the PRC. See Note 12 for further information related to this matter.

(2) Includes $0.4 million and $0.2 million at June 30, 2026 and December 31, 2025, respectively, associated with the purchase of property, plant and equipment.

Note 12 — Commitments and Contingencies

Purchase Commitments

We have entered into various inventory and property, plant and equipment related purchase agreements with suppliers. Certain of these agreements have provisions for a binding forecast (inventory) or non-cancellable purchase orders (inventory and PP&E).

UNIVERSAL ELECTRONICS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026

(Unaudited)

Our non-cancellable purchase commitments were as follows:

These amounts are expected to be paid within the next twelve months.

Product Warranties

Changes in the liability for product warranty claims costs were as follows:

Restructuring Activities

In 2024, we downsized our factory in Mexico due to decreased demand in the U.S. market and our Vietnam facility's ability to supply our North American customers. and in 2025, we ultimately ceased production activities and wound down the factory in Mexico. We have recognized a cumulative total of $4.2 million in factory restructuring charges in connection with the wind down of our Mexico manufacturing facility, and we do not expect to incur additional factory restructuring charges in connection with this shutdown.

Restructuring liabilities are included in accrued compensation, accounts payable and other accrued liabilities on our consolidated balance sheets. Ending balances for these restructuring liabilities were $0.2 million at June 30, 2026 and $0.4 million at December 31, 2025, respectively.

Litigation

Roku Matters

UEI and Roku Inc. ("Roku") and certain of its customers have been in litigation in various forums since 2018—i.e., two actions in the Central District of California ("CDCA") beginning in 2018 and 2020 including related cases against certain of Roku's customers (collectively, the "CDCA cases"), the International Trade Commission ("ITC"), the Patent and Trademark Office ("PTO") (ex parte reexams) and the Patent and Trademark Appeals Board ("PTAB"). The CDCA cases were all stayed on various grounds. The 2018 case was stayed in November 2019 pending resolution of Roku-initiated PTO and PTAB matters, all of which have since been resolved.

The 2020 case was also immediately stayed due to UEI's related ITC action against Roku, in which UEI ultimately prevailed when in July 2021, the Administrative Law Judge ("ALJ") issued an initial determination finding Roku in violation of Section 337. The Commission issued a final determination in November 2021, affirming the ALJ’s finding. The Commission then issued a limited exclusion order and cease and desist order against Roku, which went into effect following the expiration of the Presidential Review Period in January 2022. The Federal Circuit affirmed in January 2024. Following UEI's win and affirmance by the Federal Circuit, Roku sought rehearing en banc and sought cert from the Supreme Court on a domestic industry question. In January 2025, the Supreme Court denied cert.

UNIVERSAL ELECTRONICS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026

(Unaudited)

While this ITC matter has been finally resolved and Roku has no more ability to appeal, we agreed to continue the stay of the CDCA cases pending the outcome of one final PTAB action involving one of our patents. UEI and Roku participated in a hearing in July 2025 regarding the consolidation of the 2018 and 2020 cases, the stay of the cases, and amending the claims that UEI would be allowed to move forward with a consolidated case by the court if unstayed. On July 29, 2025 the Judge issued an order lifting the stay, consolidating the cases and allowing UEI to move forward on 25 claims in the case. On September 4, 2025, the Court set various dates and deadlines for the case, including a trial date beginning in March 2027, which date has now been rescheduled to a date beginning in May 2027 pursuant to mutual agreement of UEI and Roku.. On December 15, 2025, UEI filed a second amended complaint in the consolidated case.

Roku also filed its own retaliatory ITC action against UEI and certain of our customers on two patents it purchased for this purpose. Roku’s action failed when in June 2022, the ALJ found one of Roku’s patents to be invalid as indefinite. Thereafter, in June 2022, the ALJ issued its initial determination ("ID") fully exonerating us and our customers, finding Roku’s second patent invalid and that Roku failed to establish the requisite domestic industry and thus no violation of the Tariff Act. Roku and UEI filed petitions to appeal certain portions of the ID. In October 2022, the full ITC issued its final determination affirming the ID, ruling there was no violation of the Tariff Act and terminating the investigation. In December 2022, Roku filed an appeal. Further, in October 2023, the PTAB issued its Final Written Decision invalidating all of Roku's infringement claims. Roku also filed an appeal of this decision. On June 17, 2025, the Federal Circuit affirmed the PTAB decision that invalidated the Roku patent and also remanded the case to the PTAB with respect to one remaining claim. On January 21, 2026, the PTAB issued a ruling invalidating the remaining claim, and thus all claims of both asserted patents have been invalidated. As a companion to its ITC request, on April 8, 2021, Roku also filed a lawsuit against us in Federal CDCA alleging that we are infringing the same two patents they alleged were infringed in the ITC investigation explained above. On February 27, 2026, Roku voluntarily dismissed this District Court case.

Court of International Trade Action

On March 18, 2026, we filed a complaint in the Court of International Trade (the "CIT") against the United States of America, U.S. Customs & Border Protection and Rodney S. Scott, U.S. Customs & Border Protection Commissioner, challenging both the substantive and procedural processes related to instituting tariffs under the International Emergency Economic Powers Act (“IEEPA”) and seeking declaratory and permanent injunctive relief related to refunding of all IEEPA duties paid by UEI.

Other Litigation Matters

There are no other material pending legal proceedings to which we or any of our subsidiaries is a party or of which our respective property is the subject. However, as is typical in our industry and to the nature and kind of business in which we are engaged, from time to time, various claims, charges and litigation are asserted or commenced by third parties against us or by us against third parties arising from or related to product liability, infringement of patent or other intellectual property rights, breach of warranty, contractual relations, or employee relations. The amounts claimed may be substantial, but may not bear any reasonable relationship to the merits of the claims or the extent of any real risk of court awards assessed against us or in our favor. However, no assurances can be made as to the outcome of any of these matters, nor can we estimate the range of potential losses to us. In our opinion, final judgments, if any, which might be rendered against us in potential or pending litigation would not have a material adverse effect on our consolidated financial condition, results of operations, or cash flows. Moreover, we believe that our products do not infringe any third parties' patents or other intellectual property rights.

We maintain directors' and officers' liability insurance which insures our individual directors and officers against certain claims, as well as attorney's fees and related expenses incurred in connection with the defense of such claims.

UNIVERSAL ELECTRONICS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026

(Unaudited)

Note 13 — Treasury Stock

From time to time, our Board of Directors authorizes management to repurchase shares of our issued and outstanding common stock. On October 26, 2023, our Board of Directors approved a share repurchase program with an effective date of November 7, 2023 (as subsequently amended, 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. On March 11, 2026, the Board of Directors authorized an amendment to the Share Repurchase Program to authorize the repurchase, from time to time, of up to an additional 1,000,000 shares of the Company's outstanding common stock, 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). This authorization will remain in effect until such time as the Board of Directors 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. 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. We also repurchase shares of our issued and outstanding common stock to satisfy income tax withholding obligations relating to the stock-based compensation of our employees and directors and/or the cost of stock option exercises. There have been no shares repurchased for the three and six months ended June 30, 2026.

Repurchased shares of our common stock were as follows:

Repurchased shares are recorded as shares held in treasury at cost. We hold these shares for future use as management and the Board of Directors deem appropriate.

Note 14 — Stock-Based Compensation

Stock-based compensation expense for each employee and director is presented in the same statement of operations caption as their cash compensation. Stock-based compensation expense by statement of operations caption and the related income tax benefit were as follows:

UNIVERSAL ELECTRONICS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026

(Unaudited)

Restricted Stock

Non-vested restricted stock award activity was as follows:

As of June 30, 2026, we expect to recognize $1.7 million of total unrecognized pre-tax stock-based compensation expense related to non-vested restricted stock awards over a weighted-average life of 1.3 years.

Performance Stock

Non-vested performance stock award activity was as follows:

The assumptions we utilized in the Monte Carlo simulation model and the resulting weighted average fair value of performance stock grants were the following:

As of June 30, 2026, we expect to recognize $1.0 million of total unrecognized pre-tax stock-based compensation expense related to non-vested performance stock awards over a weighted-average period of 2.4 years.

UNIVERSAL ELECTRONICS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026

(Unaudited)

Stock Options

Stock option activity was as follows:

(1) The aggregate intrinsic value represents the total pre-tax value (the difference between our closing stock price on the last trading day of the first quarter of 2026 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had they all exercised their options on June 30, 2026. This amount will change based on the fair market value of our stock.

The assumptions we utilized in the Black-Scholes pricing model and the resulting weighted average fair value of stock option grants were the following:

As of June 30, 2026, we expect to recognize $0.4 million of total unrecognized pre-tax stock-based compensation expense related to non-vested stock options over a remaining weighted-average life of 2.5 years.

Note 15 — Other Income (Expense), Net

The Central Bank of Argentina maintains certain currency controls that limit the amount of U.S. Dollars that may be remitted from Argentine entities, including certain of our customers. As a result of these controls, an indirect foreign exchange mechanism known as a Blue Chip Swap ("BCS") emerged in Argentina, which allows entities to remit U.S. Dollars from Argentina through the purchase and sale of BCS securities. During the three and six months ended June 30, 2025, in order to collect an open accounts receivable balance with an Argentine customer, we purchased $1.3 million and $2.5 million, respectively, and sold BCS securities of $1.2 million and $2.3 million, respectively, and incurred a loss on the transactions of $0.1 million and $0.2 million, respectively, which is recorded in other income (expense) on our consolidated statements of operations. There has been no activity for the three and six months ended June 30, 2026.

UNIVERSAL ELECTRONICS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026

(Unaudited)

Other income (expense), net consisted of the following:

(1) This represents the gains (losses) incurred on foreign currency hedging derivatives (see Note 17 for further details).

(2) Included in this amount is $0.1 million and $0.2 million of loss related to BCS security transactions during the three and six months ended June 30, 2025.

Note 16 — Earnings (Loss) Per Share

Earnings (loss) per share was calculated as follows:

The following number of stock options, shares of restricted stock and shares of performance stock were excluded from the computation of diluted earnings per common share as their inclusion would have been anti-dilutive:

UNIVERSAL ELECTRONICS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026

(Unaudited)

Note 17 — Derivatives

The following table sets forth the total net fair value of derivatives:

We held foreign currency exchange contracts, which resulted in a net pre-tax gain of $0.3 million and net pre-tax loss $0.4 million for the three months ended June 30, 2026, and 2025, respectively.

Details of foreign currency exchange contracts held were as follows:

(1) Unrealized gains on foreign currency exchange contracts are recorded in prepaid expenses and other current assets. Unrealized losses on foreign currency exchange contracts are recorded in other accrued liabilities.

Note 18 — Reportable Segment

Our chief operating decision maker, our interim chief executive officer, reviews financial information presented on a consolidated basis, including consolidated net income and its components, as reported on our consolidated statements of operations, accompanied by disaggregated information about revenues, for purposes of making operating decisions and assessing financial performance of our single consolidated segment, primarily by monitoring actual results versus our internal budget and forecasts.

Our reported segment revenue, segment profit or loss, and significant segment expenses were as follows:

(1) Cost of sales from the consolidated statements of operations, adjusted to exclude stock-based compensation and impairment expenses.

(2) R&D expenses from the consolidated statements of operations, adjusted to exclude stock-based compensation expense.

(3) Operating expenses less R&D expenses from the consolidated statements of operations, adjusted to exclude stock-based compensation, amortization of acquired intangible assets, factory restructuring charges, severance, lease abandonment costs and costs associated with our Roku litigation.

UNIVERSAL ELECTRONICS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026

(Unaudited)

(4) Other segment items include the adjustments described in the notes above; as well as interest income (expense), net; other income (expense), net; and provision for income taxes.

The measure of segment assets is reported on our consolidated balance sheets as consolidated total assets. Long-lived assets by geographic area are disclosed in Note 5. The measure of revenues from external customers is reported on the consolidated statements of operations as net sales. Revenues by sales channel, geographic region and information about major customers are disclosed in Note 3. Depreciation expense is disclosed in Note 5. Amortization expense is disclosed in Note 6. Interest expense is disclosed in Note 8 and income taxes are disclosed in Note 9.

Note 19 — Long-Lived Assets Classified as Held For Sale

During the three months ended June 30, 2026, the Company re-acquired certain manufacturing equipment within Mexico previously sold in December 2025 following an amendment to the original sales agreement under which legal title was returned to the Company and all payment obligations were waived. Management has committed to a plan to sell the equipment, which is available for immediate sale and is being actively marketed to potential buyers. The Company expects the sale to be completed within one year and has therefore classified the equipment as held for sale as of June 30, 2026.

Note 20 — Subsequent Events

On July 15, 2026, Gemstar Technology (Yangzhou) Co.ltd.(“GTY”), a subsidiary of the Company, extended its existing line of credit with Bank of China Limited, Baoying sub-branch. Under the amended loan agreement, GTY`s borrowing capacity remains 130,000,000 RMB for general business purposes through July 9, 2027.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the Consolidated Financial Statements and the related notes that appear elsewhere in this report.

Results of Operations

The following table sets forth our reported results of operations expressed as a percentage of net sales for the periods indicated.

Three Months Ended June 30, 2026 versus Three Months Ended June 30, 2025

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:

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.

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.

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.

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.

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.

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.

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.

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.

Six Months Ended June 30, 2026 versus Six Months Ended June 30, 2025

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:

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.

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.

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.

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.

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.

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.

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.

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.

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. 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. We believe our current cash balances, anticipated cash flow to be generated from operations and available borrowing resources will be sufficient to cover expected cash outlays for at least the next twelve months and for the foreseeable future thereafter; however, because our cash is located in various jurisdictions throughout the world, we may at times need to increase borrowing from our revolving lines of credit or take on additional debt until we are able to transfer cash among our various entities.

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.

Our cash balances are held in numerous locations throughout the world. 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.

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") through September 30, 2027. The U.S. Credit Line may be used for working capital and other general corporate purposes including acquisitions, share repurchases and capital expenditures.

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.

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.

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. .

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.

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.

See Note 8 contained in the "Notes to Consolidated Financial Statements" for further information regarding our Credit Lines.

Sources and Uses of Cash

Our cash flows were as follows:

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.

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.

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.

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.

Future cash flows used for financing activities are affected by our financing needs, which are largely dependent on the level of cash provided by or used in operations and the level of cash used in investing activities. Additionally, potential future repurchases of shares of our common stock will impact our cash flows used for financing activities. See Note 13 contained in the "Notes to Consolidated Financial Statements" for further information regarding our share repurchase programs.

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:

We anticipate meeting our material cash commitments with our cash generated from operations and available borrowing on our Credit Lines.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Rule 13a-15(d) promulgated under the Securities Exchange Act of 1934 (the "Exchange Act") defines "disclosure controls and procedures" to mean controls and procedures of a company that are designed to ensure that information required to be disclosed by the company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. The definition further states that disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that the information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

An evaluation was performed under the supervision and with the participation of our management, including our principal executive and principal financial officers, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on that evaluation, our principal executive and principal financial officers have concluded that our disclosure controls and procedures were effective, as of the end of the period covered by this Quarterly Report on Form 10-Q, to provide reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and is accumulated and communicated to our management to allow timely decisions regarding required disclosures.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting during the most recent fiscal quarter covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are subject to lawsuits arising out of the conduct of our business. The discussion of our litigation matters contained in Note 12 to the "Notes to Consolidated Financial Statements" is incorporated herein by reference.

ITEM 1A. RISK FACTORS

The reader should carefully consider, in connection with the other information in this report, the risk factors discussed in "Part I, Item 1A: Risk Factors" of the 2025 Form 10-K and in the periodic reports we have filed since then. These factors may cause our actual results to differ materially from those stated in forward-looking statements contained in this Quarterly Report on Form 10-Q and elsewhere.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table sets forth, for the three months ended June 30, 2026, 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:

(1) On March 11, 2026 our Board of Directors authorized an amendment to the Company's Share Repurchase Program that had been originally approved in October 2023 (as subsequently amended, the "Share Repurchase Program") to authorize the repurchase, from time to time, of up to an additional 1,000,000 shares of the Company's outstanding common stock, or a total of 1,013,556 shares (including the 13,556 shares remaining available under prior Board authorization for repurchase under the Share Repurchase Program). This authorization will remain in effect until such time as the Board of Directors 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. 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.

ITEM 5. OTHER INFORMATION

During the quarter ended June 30, 2026, no director or officer (as defined in Rule 16a-1(f) promulgated under the Exchange Act) of the Company adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement" (as each term is defined in Item 408 of Regulation S-K).

ITEM 6. EXHIBITS

EXHIBIT INDEX

Indicates management contract or compensatory plan or arrangement.

** The certifications furnished in Exhibit 32 hereto are deemed to accompany this Quarterly Report on Form 10-Q and will not be deemed "filed" for purposes of Section 18 of the Exchange Act or deemed to be incorporated by reference into any filing under the Exchange Act or the Securities Act except to the extent that the registrant specifically incorporates it by reference.