Resideo (REZI) 7 Nov 242024 Q3 Earnings call transcript

Ladies and gentlemen, at this time, I'd like to welcome everyone to the Resideo Third Quarter 2024 Earnings. Today's call is being recorded. [Operator Instructions] 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,

Carlet, Good afternoon, Resideo's call investors.resideo.com. ADI joining for Officer; you business; be Aarnes, the Officer; presentation President of related at and Surran, Quarter XXXX our thank Mike Executive Third Chief today's Geldmacher, for materials available Chief on Earnings Financial Jay and Resideo's Relations Rob us President Resideo's everyone, our Call. will and page Products website and our Global earnings A business. release Distribution Investor of Solutions copy Tom of of our are On

and you time We differ of Resideo's results would this like a this and involve time are of not contains those Actual to than materially and a made statements statements from remind forward-looking risks other statements. number filings a forward-looking the during uncertainties. number and historical guarantees may forward-looking facts that described from Statements of to or as presentation performance those constitute results Exchange may the in call Commission. afternoon's future Securities result with in factors, including of

The other the risks on uncertainties company such affect update to annual that our performance SEC and principal filings. our in Form and We statements. XX-K assumes report obligation forward-looking no identify any

over With call I that, will turn to Jay. the

quarter, Genesis One. We quarter acquisition the ADI. of Thank new including Snap and Solutions organic in year-over-year Products everyone revenue and thanks including I'm both initiatives well for and introductions third ADI and impacts to business. the mid-single-digit report key you, strategic Solutions the of organic strong of results, and pleased growth Jason, and Both divestiture and joining on generated us to today. Products growth our from the executed the product across not

achieved revenue This year-over-year is since quarter second XXXX. first both growth of the organic segments quarter the

some and global such a an the this improving interest achieved business in positive environment indicators continued there rate the United growth in as new softness in States, headwinds in home as sales number and United sales weakness a Though market. are of such macro the the in mixed market States uptick EMEA still home backdrop. in Our are existing there

range. adjusted margin by gross finished EBITDA up of basis efforts in the million, the almost XXX high year-over-year, positive the gross pleased team's the and with company the from within we expanded continued XX% Solutions the driven above total Products margin in outlook ADI. year-over-year, points with delivering Total contribution expansion Snap One And I by $XXX quarter and end of profitability am our quarter.

hand I X and to Rob Before it excited in about. their that businesses, want I'm out off about to to drivers underlying items particularly I Tom more speak the call

synergy melding First, progress made our while on ADI very the cultures One nicely. We've on is with integration focus redundant good reducing our a of advancing Snap into efforts expenses.

We synergies million continue synergies to to annual achieve XXXX. XXXX million run in track of well exiting are of $XX target on rate $XX and

thermostats. This categories. Solutions with the of innovation consistent our to drive and Focus Second, offerings is momentum are introduce with future a Products new in we in Pro of our focus market, new regular from with key ongoing starting our cadence and products series seeing

executing the on. Products and the who provide the team pipeline to call exciting turn will additional and on now me over around Let product Tom, details quarter new Solutions third is

Jay. Thanks,

of distribution in The American our key channel the expansion the Organic introductions product with meaningful Solutions. within progress, third Inventory strong and channel retail both HVAC the X%, within products driven by new healthy. execution record particularly was and electrical sales and another HVAC North growth Products was of channels. in quarter distribution revenue quarter are and levels

the during smoke our Alert continued products First quarter. and to strong monoxide be of carbon Sales

to the to transitioned alarms Our fourth have First with standard advanced consumers Alert real quarter edition and This double-digit reduced UL safety standard, polyurethane. as materials of growth. offers recorded consecutive detection value revenue a Xth combustion synthetic successfully of such nuisance of which products, the

product our our First channels. X strong. sales across our BRK professionals to partners branded was distribution product of of electrical growth Sales broad-based through were Alert

retail We and in sales expand BRK by retail our quarter including part our continue Lowe's, our line. of product due strength ever increased homebuilder And products to to through safety our of Ace Costco. Hardware relationships the our best reported we driven partners, of sales,

primarily margin improvements points was Product This quarter, in the up operational margin XXX by year-over-year expansion XX.X% was year-over-year. gross was gross achieved sixth structural quarter that third of and basis our driven and Solutions consecutive efficiency.

began As the portfolio. the during quarter thermostat refresh Jay of new orders taking in our the first for we mentioned, product

the Honeywell connected product programmable price thermostat; thermostat of and the were benefits Focus release NXXX, our to Pro energy Included are refreshed The the STAR certified that the a entry-level a thermostat; for thermostat professional in savings the nonprogrammable products market. Home line an an the point. brings a products PXXX, accessible connected ENERGY SXXX,

All Home are an Focus for operation. experience installation to and simplicity from excellent of provide designed the to Honeywell products style

a retail of Pro store look and the up mid-tier partners across with of products of resets the steady the products portfolio the we forward premium late of In response for of customer We Focus retail next of variant We the new line in Pro began initial our October, XXXX, to quarters. has over positive. partners. thermostat been our several following QX shipment the stream to and Focus distribution will release extremely this preparation in key the portions

portfolio. pipeline in about also security new excited I'm the our progress on product our

in drive later Vista markets. to as future years, key we the cadence medium also XXXX of and major excited will new the and for is but VISTA innovation only our introductions, out is categories. line. upgrade a portfolio update This our the larger products set We an the future and current dealers new first return represents to small and launches pipeline market that also product target product through not regular this These move to and XXXX. in I'm in product position, it into new a stage many for residential what roll month our support introductions business

With turn to I'll the that, over Rob. call

ADI sales growth and Thanks, XX% Tom. X% year-over-year third the an quarter on basis. growth reported organic in

All key average in remarks ADI's do resulting organic business include activities the driven on represent One strongest year-over-year by of history. growth impact and my following large revenue daily all Snap with not was growth Year-over-year and strength sales acquisition. in across customers, commercial the categories of

this finish and supports networking. acceleration our the and continued greatest Datacom. trend the the professional in team focused on Our category we categories of of into performance This expansion growth audiovisual verticals is perspective, to QX saw sales carrying a forward From our strong. year ProAV commercial

partially was by saw residential category, also our headwinds. year-over-year audiovisual largest We surveillance, growth. Such return to video offset growth

we grew ADI progress on also XX% to year-over-year. initiatives e-commerce QX, and continued key around exclusive strategic brands. digital sales In both drive our our platform

and improved user around to drive omnichannel increased investments Our website continue customer adoption. experience

We technology additional launching aid are improved integration quarter, and to product technology the a enhancements an AI fourth the search including user discovery of leading in experience.

customers, focused Pro's XXXX. Product received new feature in power products; Show expanded Apple year-over-year. long received introductions earning platform; delivering Exclusive on for well of brand XX% our sales ProAV networking at were delivering key requested CE that InfoComm QX, WattBox solutions portfolio, product our Best and a Music, the ControlX that XXXX; integration access Award including the we launched new recognition enhancement to grew by networks In enhancements Best management to market our for across

the will strength we offer as as to more I'm make our with investments products market. of the progression believe One portfolio new even well We we together. will Snap what continue the we achieve exclusive I to integration, excited R&D thrilled about large the brand with will with can am now and bring

and One leadership executives. We both combines ADI have formulated Snap which our ADI team,

exclusive focus, to the selling combined assortment addition force our combined opened brands. Nebraska. capitalize October, capturing opportunities store cost to combined of optimize showcases Opened company Omaha, and future layout. see align of our further opportunities Complementing our e-commerce the the first and in In increased in synergies, store we to store on we refreshed sales our

business, we our our many Omaha are will many what stores leverage to showing close pilot that format. At this just our the customers days the marks future our serve storefronts delivering their of XXX like looks needs. across future validating post first of the with points and proof ability acquisition,

do we customers. our with starts Everything

and team installers an continues our growing the Our be customer to from experience servicing delivering focused on professional on day-to-day execution the business. of enhanced combined

as we to Mike trends markets Given the expect to our momentum ethos outlook. out now core to the close and results we 'XX. commercial discuss we quarter, saw customer-first I in our and over continue in financial call the turn third our positive will

everyone. Thanks, Rob. afternoon, Good

and flow continued of range. growth, consolidated with adjusted quarter expansion, high mid-single-digit improved the profitability financial business above performance Third free strong our across and cash sales was gross margin EBITDA outlook end the organic

of organic revenue Third billion quarter million XX% reported year-over-year an and EBITDA as $XXX million, basis. $X.XX Adjusted up XXXX. XX% in was was up $XXX compared total to QX up X% company on

diluted earnings again cash prior operating $XXX flow quarter was at compared and Third year, adjusted $X.XX in share was per fully $X.XX with million. the strong

and Products to Solutions. Turning

of margin the basis as X% organically up year-over-year margin revenue a million declined quarter represents of was and consecutive reported $XXX Third was XX.X%, and Solutions by expansion. up Tom points and year, to XXX last gross compared Products quarter basis. sixth X% on said,

Safety increased combustion North strength modestly American and continued by across by categories. First for realization Alert challenging volumes was where lower Pricing HVAC the security. be in headwinds pump product portfolios. continue with to and and This heat product products Volumes conditions the continued substantially offset partially EMEA, all year-over-year, in driven gas

primarily slow gross are recent XXXX. anticipate We in margin additional gross Solutions introduced expansion products new pace see of via and we to expansion opportunities margin continue to efficiency, Products though until the

$XX quarter EBITDA million up of effective EBITDA basis expanding was reflecting Products operating adjusted Adjusted with $XXX points ongoing restructuring expense to and million, and $XX operating Solutions' XXX control costs. million costs year-over-year down XX.X%. to was lower by third margin year-over-year,

to billion. ADI. QX was revenue $X.XX Turning

contribution, commercial all drove growth the QX. One commercial categories. Excluding categories following prior the in revenue year Snap versus quarter in to key the of improved for trends $XXX the Sales major strong up was organic period. million X% ADI year-over-year finish

flat in and of year-over-year reflecting expenses million Our $XX $XX impact digital relatively investment was diminished year with pricing and benefits to inflationary brands business, as controls. in gross Organic more adjusted focused and ADI margin by XX% initiatives cost benefited Snap in certain operating from was exclusive last up categories competitive organic the compared offset QX negatively remained of continued profitability. contribution. One Lower EBITDA million

the to company. was increase. cash $XXX back XXX% from a Turning total $XX year, with last operations compared in QX million QX million

million. the For flow cash was million months, $XXX $XXX free generation was flow trailing cash and XX operating

to total Now turning our company outlook.

million $XXX to we revenue and billion, of $X.XXX the For total of EBITDA to net to of adjusted million be range $X.XX. expect company $XXX the the $X.XX fourth EPS in to billion in $X.XXX quarter, adjusted range

the EBITDA range year billion we to in be full to to net in million. expect company of of $X.XX and the $XXX to the expected $X.XX. million range For is XXXX, to be in Adjusted adjusted $XXX the $X.XX range total of $X.XX EPS billion be to revenue

generate million to at cash year company for XXXX. flow expect $XXX We least full the total of operating

So conclusion, a strong in of set results. QX was

progressing our We well journey. on are

We are pleased are margins One. Products we and the Snap improvements our with achieving structural and operational Solutions gross continued integration of execution, on the

now concluding to over just I'll the back a Jay remarks. call turn for few

efforts. This across flow generation introduction year-over-year and in progress Mike. strong and with notable growth Products a cash for new and significant ADI, our Thank was Resideo product quarter Solutions you, both

product of close the team momentum We are is continued I'd by we pipeline integration out cost to execution strong XXXX. successful thank like developments and their encouraged driving as of success which One. for early and a the Snap discipline, launches, the

to partnership until Andy is and in plan ensure a successor as Roger retire congratulate comment Chair turn make we of Board. a on company their senior on his the with and to appointed adviser I'd intention as of a Resideo leadership my CEO to and for remain and appointment XXXX. to thank final I Andy continue to I the transition. the CEO to want like Board Q&A. Resideo smooth to I as will before announced Today, as serve a

and my lead my X.X have by for decision company privilege the accelerating exceptional all colleagues to and for acquisitions, introduction, the for of financial all That last It's includes product improving around revenue being and I've gratitude earnings portfolio make profile in together. product Resideo from better the with we been results X been accomplished years. which on our refocusing transformational growth. I world, executing future enriched positioned the and new

have I in the quarters. X objectives coming primary

business me to it's to inherit First, business I with next intend Resideo's this executing leader important momentum. continue that strategy against our because

Second, I My plan to bright as strong confident for of to smooth as Board transition. company and our ever, I'm and Directors excitement ensure once with our work is closely a its successor my future. in named

up for that, With the let's Q&A. call open

Instructions] [Operator

today Erik from first Morgan Your Woodring comes question the of with line Stanley.

you're on obviously, announcement, congrats yet. not the Jay, done us but with

love those very on I'll So for would came save just obviously -- to kind during in tough -- just a times. when of brain I maybe is pick you appointed. your you've successor

a You Tony. leader And you for along think lot its joined with seeing next I focusing in next that, margins, silos, really that had you this stated goals for please. you journey? I do And needs out. you that right, What follow-up, looking phase Resideo when breaking a kind are of here then and did operator? down play have think of of What on you're

comments your to question. this good in in comments, really with is that started for before sure and transition my year we I that the Thanks Erik. move spot. make making company me I retiring Q&A a next in about mentioned Thanks, and want good

good So and it's chapter years. next in I'm it, of of really the lot done those of like things, to as because X.X call I book, we've a proud the

really way, progressed now what I my stated, one and company poised challenges ahead of potential there in be. the in this I actually a reasons a because when years she And ago, not to And drive wonderful to to is the It's to think of job and And X.X was about off be further what worry great do business. then of grow highlighted leader we're took could the done, a and the on lot I really as we've why growth, X.X future came I long could for some bottom think you I comments. trajectory as that saw about both I top of a what things can worry profitability, it's able and or leverage we ago the the and the focus continue when we've that for to just new time we he picked, of years had line with line.

that kind next just there. and the ADI forward too, to comments ever, out Okay. Maybe, That's me, Best to look on your love Rob, appreciate right? I helpful. stood daily developments Because your I'd of early Snap to you declining look what's pick of brain that year-over-year, One. us up behind XX% almost understand scenes? ago, exclusive help this was brands obviously, on up XX%, long e-commerce over of none going not Can including just business too kind the year-over-year. sales

changing? So really what's And market happening that the sustainable how in is that's momentum?

underlying that, going could you isn't better margins? Why know But into us that for is understand of inflation if than other feed if and kind so pricing me. about translating kind And talked help competition you capture I why in kind can't away. the backdrop of that's just just of it demand why you But pricing? that strong?

there. There thank question. lot was Erik, you. a Yes. Great

it pick a and few me try let apart ways. So different

month with remember the May you from our and about in specific April, QX, we every quarter, continuing momentum, right, commercial talked June, of categories. if momentum So

education actually up strong and fairly national third quarter. play which saw growth. throughout right, a from venues, that accelerate the those we continue verticals which remarks And I prepared to large the banking, to of saw with as talked in was government. right different number the then fact verticals, that the retail, good And saw see about that really back and quarter like some my guys to coming large coming really And really, they entertainment we our we to continue a lot growth accounts, of said, in

the in pipeline as also grow third throughout And the really, pipeline, we I we the continue project saw quarter, see comments, throughout quarter. mentioned -- my large And second project the to that.

that the to fourth continue expect momentum into quarter. We

it. that's kind That's growth. So I of justify about how the I talk would organic would how

about time. started out you over have what something years on categories. year part exclusive some one. driving the That's X, DX X a all e-commerce terms we we're invest is Snap products if to And It's equation, e-commerce growth. quite That's an brands We're of lot front. we that new at of been of look to In our on talking This our in area seeing ago, across especially business. brands, the the a take our exclusive launching now XXX point line. we're where of for

on then significant And the experience, in advancements the of lines one, the DX we some made along speed. this side, year user

last that just about progress and there. capability talk me heard launched we're You starting search already actually our to AR some see night, great

investments few been here of finally well. some the concert the haven't that with sectors So making to last in seeing growth been us of of areas these result that coming -- commercial it's over the They're we've kind in not are for some the fruition overnight. as in we're the years pickup of the

Your of Evercore. next question Chan comes line from the Park with

Amit. on Chan, your had announced on congrats the retirement. wanted just for on one to is SG&A. I This echo I Jay, just

in what think of forward? on Any that wanted the I came would targets before, we we super I little show to than were helpful. understand anticipating. it expect mentioned that higher where should going you a on the color OpEx these some up to be cadence just

by the thanks unusual couple single-digit inflated there onetime It's at Mike. things in millions. this a Chan, P&S SG&A Yes, a was quarter of for that little call. bit

We That basis. return did a it that So higher bit to than see shouldn't on in be more a come go-forward we trend. levels a should expected. normal

was a events. due higher So bit that on side nothing systemic but onetime in there, it some to

until forward new pricing products then gross follow-up in the margins, talked abating expansion some on on and headwinds expansion the on a Got programs side, just 'XX product this back we XXXX? year as margins, going ramp half How what on it. make products ramp? to you there expect goes? And in as the Or are be the margins the loaded should can should more And think about the offsets that as business. we this linear in or ADI

Yes.

Clearly, XXXX at got think yet, the P&S about the momentum lots as for exact haven't out accretion new the we business. But there forward. the side. appropriately. in product margin to timing, out future when guidance think we still opportunity of our make we will guide still we'll there's drive positive We we So obviously. about to continue We're get gross that get sure the the introduction, it

turn the this Willey This I remarks. concludes our Jason to Q&A. At call back for time, closing

you Thank please you, reach rest today. participating you your as questions, And a feel any to out. Have for have always, additional everyone, Thank good day. much. of if very

This concludes today's call.

may disconnect. You now