Resideo (REZI) 2 May 242024 Q1 Earnings call transcript

Ladies and gentlemen, at this time, I would like to welcome everyone to the Resideo First Quarter 2024 Earnings. Today's call is being recorded. All participants will be in a listen-only mode until the formal question-and-answer portion of the call. It is now my pleasure to turn today's call over to Mr. Jason Willey, Vice President of Investor Relations. Mr. begin... now may you Willey,

Trunzo, Good materials Statements afternoon, facts on Resideo's Investor call joining for release Relations Officer; you be afternoon's copy Officer. investor.resideo.com. of our during and to Quarter like would that XXXX may the thank earnings Anthony statements Executive First page Chief today's related this Geldmacher, for at Chief constitute historical performance Earnings Financial available and guarantees Jay remind A contains presentation other presentation us this call and Resideo's everyone, our statements. are are Call. will forward-looking We made of of our than you forward-looking website assumes and On from result future those differ the uncertainties. Actual or Exchange in no annual and report factors, number any to and results results time other our those to as turn our filings in The a the the Resideo's risks materially the I such performance that, uncertainties Form forward-looking of that call statements a from Commission. XX-K risks With identify time We including of with involve obligation Jay. SEC a on and described principal company will of and statements. affect forward-looking in may Securities number update filings. over to not

us first excited by I'm Resideo. team the for the today. in in the quarter and Thank joining you, progress everyone, and Jason, the delivered being thanks, transforming results made

and of previously the end we quarter, our adjusted the reported EBITDA outlook. the revenue at midpoint For at provided higher

in segment EBITDA a & evidenced Products year-over-year. X% growth Solutions in build, within adjusted by Our and XXX expansion basis point margin to gross momentum continues

our operations transformation progress will priorities to on our agreement expect enhance is to and acquire efforts by our highlighted continue portfolio, across strategic We One, optimization we Snap initiatives. cost which This our make across great Resideo.

living distribution capabilities breadth in the to ability business while customers. services ADI and proprietary serve smart attractive to audiovisual new will expanding security expand positions our and products across Snap categories offerings and integration and One For better offering, product expand core our growth business, security. and tighter our combination The specifically extensive with ControlX safety product customer through connected products and home base. high-margin see solutions, broadens automation and Snap opportunity within We One's ADI's adds

in leverage also our and supply expertise development One's see and Snap design to efficiencies opportunity proprietary both chain We capabilities to product organizations. drive

our meaningful EPS a expect accretive will We've Needless XXXX. on Resideo quite identified path leverage whole, between levels. to the to value gross X the and businesses impact future in we acquisition One have excited integration Resideo, a and to about the meaningful cost of say, positive be we team expect to and is Snap to acquisition lower the post-closing For the creation. synergies adjusted as margin into long-term our quickly a

We unlock value are leaving portfolio. our no stone to long-term within unturned

In higher markets. products addition will opportunities growth portfolio acquisition, continue toward the pursue One to reposition higher areas within we the and to margin, to Snap solutions our

the we to of We continue year slightly. million first as $XXX last to reduced in savings overall $XX cost we hit Combined progress basis residual excluding our track operating cost XXX by target us and products savings with are quarter the efficiencies.These gross helped restructuring. outlined on and expense expense make we even efforts million solutions costs, goods, volumes managing for the expand in in on driving laser-focused and also overall by margin points, quarter, gross of on declined XXXX. are for We operational to

businesses. Looking at the

offerings the of ISC latest week, advanced within nationwide announced first sensing that we summer. era portfolio a introductions this our indoor These product show released are first introductions, awareness, coupled safety and alarms AI-enabled our month, video a of fire will unveiled & smoke We defines with professional ADI recently products. camera, with which at available West entire technology protection. suite at last new whole Last Products we home and security our alert be ramping At growing up Solutions. provide of new retailers alert residential offerings

smart list customer of while thermostats presence to more their the Program growth to to addition Earlier react and In to we predict, demand a partnership efficient of in response Baltimore peak to offering. are and identify help continued also Gas source innovation, utility see bring and home meaningfully smart events to and consumers home. alongside brands We we comfort. can help products intend builds week, announced incentives. the smart market. use, and upon enroll for work response financial announcement in Electric as solutions our leading together our partners energy and utility receive providers in maintaining This this participants a all charge appliance growing optimize and the expand proactively and demand with demand a comfortable

continue content this new residential construction, grow market we to We expect our to a expand and year.

success growing significant products have branded examples value and Our incremental breadth channel relationships into BRK we homebuilder created the through this of Third are driving depth acquisition. and first safety the of

expand by over Resideo position Products driven & and margin points lower We EBITDA expansion XXX are operating margin adjusted expense. channel leveraging gross by basis strong grew year-over-year, BRK's relationships value and with expertise proposition meaningfully Solutions with our sales to customers.

our our sales. grew quarterly into expanded be and in digital exclusive quarter, We experience. the are sales of in Solutions quarter, year-over-year, have ADI website backdrop profit initiatives. the demonstrating grow, and app over accomplished of reaching our continued & ADI, the strategic while the digital past Products this to transformation key customer work highlights achieving years. continuing capabilities invest improvement customers XX% In continue record. long-term that lower undertaken ADI's expansion count X the the margin process. to brand mobile purchasing significant we improving X% to e-commerce volumes increasing against also sales a integrators first At embedded

portfolio resources and gross a and of see continue margin exclusive acquisition margin of opportunity of ControlX our We in XXXX With reach. and I growth part of discuss turn these have opportunity products, added customer drivers One's capabilities of We in for to enhance results ADI and awareness the together enhance over The will detail. strategy or an offerings. One more Resideo complementary quarter is call proprietary whole. offerings. significant both Tony extensive One's and and Snap broad outlook to as bringing our to and rate expand growth customer important our Snap support platform customer Snap Important first to ADI's to offerings offerings with that, the

afternoon, everyone. Thank you, good Jay, and

Genesis $XXX adjusting $X exclude million $X with by a we in the XXXX, companies. an we respectively, adjusted Solutions These divestiture million Products for million to quarter's of to XXXX, diluted points. the costs. the Operating adjusted Margin and to quarter QX year was our Thus, to Resideo revenue expectations, reported forward. way million strong sell-in share the moving our inventory levels. impact this first last year-over-year peer quarters, quarter gross believe last as down impact the reflect million largely and continuing comparison quarter seen business and gross were the revenue Solutions compared compared our Adjusted Genesis. million we've and our distribution continued an Beginning clear essentially lower-margin to & X% margin We million calculation the first EBITDA actions and over on of Products has business & was in wire first X% of was but profitability $X.XX XX our and income was cost fall. per mirror of stock-based straight basis in $X.XX for largely the the basis year. margin adjusted billion of of and past $X.XX, and above earnings expanded midpoint of $XX $XXX XXXX and on in of trends direct generate products lower we quarter annualized intangibles. we view Fully basis. than better our several posted of in solutions. momentum margin of compensation reductions last improvement. will EBITDA expect quarter and First HVAC These $X.XX powered quarter sale returned the excluding changes expected $XXX savings amortization of included restructuring by are X%, normal the fourth channel QX results, lower than modified $XXX sell-through $X.XX with EPS flat provide was

new First driven another delivered construction market. branded in our quarter, residential the BRK Alert products by strong

Solutions over was now basis X posted Our quarters the Products BRK more XX.X%, as develop expansion. of growth. in points labor inflation. double-digit are margin labor XXX relationships year gross has We year-over-year homebuilder efforts and material fruit margin last improvements bearing and years than to consecutive QX impacts efficiency up & our represents costs, reduced compared freight rate of quarter to consecutive offset in and fourth volumes year-over-year of which the raw costs, achieved last several

leverage recover, benefits improvement actions, expected combination are to April. points. facility and sale & and million reflects EBITDA undertaken gross operating by quarter a restructuring fixed actions Mexico unit a XX focus utilization $XX up costs. XXX volumes past with The one our million As This volumes including continue expense margin of year-over-year expanding million, Diego Products believe higher facilities year-over-year, $XXX over outsourcing over and can Resideo. was Products the in controls San cost down basis expand. excluding & Solutions transformation margins & the paying to we off first for Products adjusted for we've on further factory Solutions $XX our expense of Solutions months reduction on of heightened rates of was cost the early EBITDA our adjusted

delays continued March, compared XX.X% the ADI, pricing Turning was a of February. up the year. in we quarter. brand Project X% ADI adjusted down was the revenue up compared gross improved $XX in projects XXXX second to XXXX. softer and impacted in $XXX period, business prior by down were were X% to large EBITDA margin year QX first with quarter $X picked lower XX% exclusive compared ADI experienced market. in first Gross revenue prior XX% operating ADI margin million, costs pricing reflecting sales and reflecting expect were gross last million million, year, compared QX to XXXX flat margins January with million -- in last QX trends at versus benefits QX half early $XX in in the was transitory in and the competitive expenses. up of Corporate and

quarter's we was use segment $X of expectations. move from identifiable into million in $X carrying last to costs way in line cash we operations with the corporate.QX in previously indicated the and costs we million have were a last year and As in with businesses that corporate clearly changed call, compared report our QX our

as million quarter to Improving working flow made cash at weakest we payments continue cash our and initiative, accrued typically generation we is a quarter and major in generate match XXX(k) remains least expect $XXX performance to rebates. from on customer in first operations XXXX. cash The bonuses, and specifically capital

to Turning outlook. our

and remains down to predicated starts flat be by expect on we low guidance grow new and single Our following residential mid-single remodel to residential activity construction to assumptions: digits. low year-over-year the -- to repair digits

assumed XXXX. HVAC of half largely inventory have channel We levels normalized first the in

Second of in $X.XX. expect billion, $X.XX $XXX be range the to EPS in range million to the of $X.XX adjusted quarter, $XXX to to adjusted EBITDA million of and billion we revenue $X.XX

range $XXX year, Adjusted $X.XX full from the expected to to range $X.XX of to billion adjusted EBITDA outlook provided the range the is be to For of revenue billion to be of in are the $XXX unchanged the $X.XX. we in million February. back Both to $X.XX million. EPS and in we in be expect

year XXXX. and than XXXX market acquisition expect full at cash later A adjusted end outlook solutions. to of close EBITDA stabilization generate flow We first include higher million with for impact within second and signs at of the areas SNAP start quarter which in operating further does of of we XXXX. of half the the no the to proposed any X, not least our from $XXX products expect of expectations This key strong

headwinds, efforts position adjacent well market in some category serves facing that digital currently transformation, expansion we is believe improve. and exclusive market's the brands our ADI While ADI as us

of and operations, of XXXX. some sheet. cash stock balance agreement turning targeting leverage At adjusted assets, excess back transaction of secured potential from approximately debt, to Xx expected to the to comment $XXX financial our recently an from acquire our divestiture to the pro ongoing the CD&R announced Before we perpetual X.Xx is preferred to million expect One. I'd forma implications by Through QX. reduce we $XXX senior approximately from closing, cash convertible additional with middle this compared end of Financing include on call Jay, million new a of of X.Xx are in be our like to to Snap EBITDA investment growth the at to our leverage nonstrategic and

of Jay for profile BB questions. strong credit strategy before investment-grade not to a call concluding take an ratings changed. Our remarks back now we turn I'll and maintaining has the few

Thank Tony. the strategic continue we and Products margins. closing, from on products business. benefiting strengthening significant initiatives & you, In our on make focused key to with Solutions and cost optimization progress improving remain new innovative is

well all outstanding recently Our and We in the to our One employee growth continue business as build and us of to we will first entire acceleration for key want Operator, terms on the profit market base announced the environment believe enhancing Snap we the across these overall to profitability. accelerating their efforts initiatives when move of add XXXX. value acquisition in excited our now position strategic questions. immediate efforts I'm for I are ready favorable. momentum for more becomes through together Resideo and quarter, thank of

Instructions] JPMorgan. Your is question [Operator Carpenter of line you. Cory from first with the Thank

step follow-up. out volume quarters. stability trends. of and just then the on about expectations the the by a I seeing if It sounded like you you back after talked and trends one had they could the year. a hoping start rest I But could you're perhaps flesh quarter few last order this you that kind for of there your was expanding took

that's to -- I trends that's been Order as the mean within pretty But or of you're business Tony. P&S, have not stable. I'm if pretty been what sure stable. have And whole to indicated. it's we the kind referring rates one Cory, order segments. a of Hi darn

So, seem sell-in out and we're starting to sell-through be and to aligning. see the that the flatten

better. dynamics in first so were patterns. market a of That definitely positive.We in March sales they roughly But where did quarter softer X/X orders the seen with softer the than really overall, order line sales ADI. is a a year bit think averages don't prior Daily that's daily the significant the March averages was in maybe So at I in softer business and see there's in little or change year we've period. ago. seeing some a were

is know I'm couple There's end slowed, mean they're asking demand something and and diversified you about inventory, markets the we I'd ADI we last I'd has turn them really and And Cory, normalization Jay. in is also operational historically we're think The on guys -- so add, this continuous been a the move standpoint, quarters. pleased I up, ADI, about definitely spot about. very I say that but in does begin good leverage specifically been base. success market which back positive. last in growth to this less I of and from we're and HVAC the with correctly the Tony that's got which have is when alert, of for excited an right. mentioned to first that's forward the sales homebuilder market ourselves And channel, markets it have will, quarter, there that volatile to structured it customer thing up. the

through have So we well are forward for yes, think of things softness, move them but some that will as year. they up hold the the those I

for guess, And just, Tony, follow-up. a probably you, for I

came reiterated Street, -- a XXXX. in it the guide, XQ the of course, but you For little below

Just something curious of in out if there's in models? in anything you call perhaps XQ not were seasonality we that can incorporating your terms or

and But the the not like expectations a our yes, our mean I I phasing. you we're we relative to the relative relative our what take for were to we're little We'll not consensus what internal light light were it's QX. year. guess QX. to entering no, budgets, -- outperformance was Cory, in

to have around we're the comfortable guidance sit to that, and year. some with continue caution point, the pretty where full We net But holding we for we're your year.

I Yes, agree.

thank Good, you.

Zaffino with the from of next line Instructions] is question Your Ian [Operator Oppenheimer.

wanted to confidence you I quarter. I gives the wasn't what then growth about guidance. you only And first I or the but ask in you X% so pointed e-commerce, into think, the second just e-commerce while was strong? also, last as guess of up, quarter ADI Kind to quarter

your So how second the for guidance AI do quarter? you get to is where

frequent year Yes. over give we we're for just at flow as have so we points guidance is out are that what is I ADI when get have. -- the we are really inputs, main what delayed that that's quick out, main of sales the they're whether through mean, to a saw with to stuff. we stronger clear, delays landscape QX. a going branch regular just at their we I that customers have as didn't the that mean, what play bid half them And move of turn year that inputs it's way customers, bit their the year, know, guidance The around give to sort and we it's way. their view is or shows didn't project release look or the specific the the things we likely be When from we gave second of again, trade for touch playing the and the from pretty think sense we the I as the year. It's was expected whether and ADI. cadence a definitely And you to business.The out activity their been we those hearing

there's the as more they mentioned, softness because in market we I'll of market competition the softness. have because too out also that experienced now add right

I how of that. you that forward that so think think good on. But spot today, I I that Tony he's we we feel put ties about I we into to what guys. see mentioned, terms everything think think And it in And

I if to is is how And then then the And about now? so listen yes, That's that Alert it could helpful. inside year. how the Okay. And talk a the we legacy full for little versus bit apologize. PMS. Maybe that's business? Good. First turn company doing doing

Tony little channel. Alert expand about BRK has being and about talked stickiness And it the bit, mentioned a expectations. been excited the able good First just a mean my I progress that. my and there the super chair, in little but it strength at of I'm I to exceed -- it, builder that's really bit maybe the

-- in I about and months And about XX the continue Alert I'm about talked that The R&C. opportunity channel. that the has expand of that helped terms very, overall expand that. BRK in beyond that have we the we'll we'll general, talked So, very think probably last in the to RNC First with channel. excited for we've of to leverage And content within the increasing more content that, BRK content and

Okay. I that. appreciate

Ian... Thanks,

At questions. I this are any now today's hand to further over no for remarks. Mr. audio time, will closing there Willey call

us today. And joining Thank of Thank Have weeks. out We you, a good look your if feel with to have as you. always, rest forward you you questions. any everyone, for over day. coming please the reach talking to

concludes joining. for This you call. today's Thank

disconnect. now may You