Snap One (SNPO) 14 May 222022 Q1 Earnings call transcript

Good afternoon. Welcome to Snap One Holdings Corp. Fiscal First Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. to President call of like One to now Vice Senior Finance, would turn over the Snap I Eric Steele. proceed. please Sir,

Great. and afternoon, first conference operator. Snap you, call. fiscal earnings quarter welcome One’s XXXX Thank to Good

a being reminder, this As is recorded. call

Snap from John are CFO. today Mike Heyman, us and Carlet, One Joining CEO;

statements response to not Before and them. additional make therefore, management like that expectations, be to questions, not prepared but remind of in including, your we placed to, or reliance undue not begin, performance. we remarks events our limited may statements forward-looking everyone upon should These and would guarantee future contain statements, future statements forward-looking performance, future financial do

to events XXXX XX-K XX, period is our today’s expectations this of time-sensitive accurate are our press comparable the and directly reasonable, including obligation believe broadcast, company’s in reflect those identified current for of results undertake or risks annual of the these that the we involve time the that GAAP Report financial Although to with date Factors referenced the of this uncertainties, occur on most differ ended management release are the also call XX, reconciled call. All December based This measure. in are call and earnings Form measures section statements Annual after information SEC. inherent on non-GAAP filed XXXX. contains Risk only materially. as any expectations These Actual we no changes could statements to in revise and May

on Investor and a investors.snapone.com. conference this everyone Relations available webcast website would recording for being Finally, at made remind I like is that to will our be replay call

have posted to Relations With results, that, now earnings the the to John also be accompanying turn I’ll Heyman. a our these supplemental Investor found website. addition our CEO, call on John? In over webcast, which can presentation we

to discussion, today’s us turn for Welcome, then start afternoon. highlights and updates, who our recent Mike and and discuss this for and again, will well To XXXX. call I Carlet, you. everyone, call the as will thanks quarter, CFO, we’ll our thank I’ll over share joining remarks, review Eric, questions. up closing open provide our of outlook on for After the financial results an that, some for then update I’ll the remainder the as

here As a everyone integrators empowers brief professional platform and One, on provide scale. global deliver connectivity reminder consumers living joy, to a Snap listening smart we at to to end a security that

them cycle. living XX,XXX this to across is untapped. do-it-for-me our believe We network, leading and successfully we and smart we’re proprietary professional a and we work strategically to our with mostly our With with platforms and partners commercial network allow industry, third-party digital distribute large distributor workflow project The serve integrators products to residential solutions software to our integration support and smart of living our local customers life As to power and the our through the revolution. further their proprietary entrenched opportunity integrator branches. positioned approximately growing portal e-commerce growing

see interest rely and solutions and positioning demand including supply capitalize living Clearly, integrators market, our and the to consumers front an our rising in turn, done. that anticipate rise, continues smart to for exists number to for there experiences the end chain we’re our of forward. growth this continuing uncertainty on In demand As will we environment smart secular the war is robust of propel on living It’s rates. company the tremendous opportunity we job constraints to us. in business within inflation, increasing that get Ukraine, in professionals durable

housing and remains favorable sequential are modestly favorably still the partners economic starts, such robust busy Despite uncertainty, housing our and building a operating are macro demand as permits, believe and down we basis, remain if residential and construction even positioned integrator backlogs, Macro backdrop. to However, in on averages. relative we a micro completions indicators strong. historical

Additionally, the than housing for repair of the remains the is end market more higher insulated to and backdrop the expected at expand, broader spend and remodel market.

market demand platform and aim to profitable platform and installations, this We for outlook. capacity types will platform, and end runway of the continues small easy different this Snap consumer have these secular surrounding We reliability traditional Specifically, home shortages which profits, are backdrop, our which and ability one growth project investing of like do installed. these the and infrastructure that easier us higher luxury homes their remains to luxury this no the in future seeking post-COVID, remains complement With in enhanced buyers we that business industry investing proliferation businesses. single-family provides for successfully product that in inventory our a solutions to that housing through this a the help favorable platforms gives strong, enhance Further, smart business movements, shown rebound success population a frequently our serve. is needed and their trends pivot levels, types supports in living otherwise we we improved life confidence sustainable the with over Furthermore, integrators drive environments. believe integrators long-term below commercial to time of The in of business satisfaction. properties grow One. makes businesses provides

partners These indeed commitment now a But reflect the unwavering times. quarter. are our minute integration me unprecedented our take Let remained stalwart. and to past has on

be they living we XXXX, smart day objective that continued for off need the as the to demand with million the have robust on Coming a increase Our to during capitalize excuse partners ago top banner opportunities solutions. is every our continue the me, this quarter. XX.X% ensure of we over the an meet us – sales year of in from front past to Beginning XX integrator growth net $XXX they period. products the quarter, comparable line, generated successful in

inflationary chain constraints. additional supply meet the primarily Our have efforts resulted from and to in demand business, pressures cost to

our year basis. as-reported to us company-related execution did year. adjusted This $XX.X from $X that just million, the included deliver incur approximately an allowed public an of EBITDA of prior on expenses increase However, million the not we in over X% skilled in prior

Excluding those increased XX% EBITDA year-over-year. adjusted expenses,

also We accomplishments: including the across following initiatives, a we strategic of in successfully Electronics. the key range Staub January, First, executed of announced acquisition

across us long-term As fulfillment growth Canada, partner the for professional more This the way product support in in to for our and positions and of acquisition this important choice, was Canadian long-time distribution accelerates deliver for a natural our integrators acquisition penetration strategic it faster us Canada. superior geography. market,

we Program, Snap previous even Rewards and One, as earn under We which unifies One loyalty launched a integrators program programs industry’s Second, got better program. local effective the all-new most Partner January just the every rewarding now believe rewards ControlX purchase. on XX, distribution Snap our single

deploy our in Additionally, step us to the products unified to to a digitally-enabled points-based strategies share expose forward enabling and critical new drive wallet integrators program is growth.

Washington, Third, awarded we as were categories were in outstanding most Pro awards Quality a Awards your you our March. confidence next for the serve to bringing we of for vote presence humbled for as D.C. XX than local exceptional to and and deliver. the Metro more members the service. footprint build our our partners Snap Quest Thank to new XX opening announced continue Snap omni-channel branch twice across in with we domestic and the to XXXX competitor Fourth, local to XX One service team area, of reflect many your earn our to One the CE branches. XX honors

continue team opportunities Officer, incremental existing strategic branches local Singh. Fifth, branch business will design the relationships, strengthen of our infrastructure purchase in and implementation on add investing of Our integration enable and the growth. appointment focus we network. new and intend bolstered expansion our they network Chief to our senior the leadership in We Information to scalable Maneet through the local our efficient integrator Maneet our of expand local community.

welcome We’re thrilled our team. Maneet to to

Our success continues to sustainable growth. in execution our reflect to playbook long-term the drive proven against strong QX

our integrator a innovate models; expand products, network; one, in share execute strategy software tech-enabled rooted and services new on new with three, develop growth pillars: strategic and existing and five, with five remains solutions; reminder, number key two, four, this global our workflow M&A. As integrators; increase software wallet revenue

all continue we these and fronts progress on as beyond. look to to XXXX make We

the Mike. to comment now our the of on turn over me Let for year, outlook rest and briefly call then the I’ll

to well spoke earlier, deployed strategically challenges while I supply circumvent to persist, As executed hurdles. we have and chain balance near-term sheet these our

and hard optimizing team approaches air freight. at sourcing, Our has logistics inbound been to componentry our work

to Our reengineer have component tirelessly worked engineering products availability. on teams based

support have we’ve demand drive quickly products available added find year. project the for challenges meet from strong us of to been performance, to in our their worked teams, with efficiently Our general efforts objectives the and firmly as these integrators, Thanks sales well our come economy. these meet diligently to and to continued publicized integrators efforts and sustained the positioning teams needs. our to Notwithstanding costs

we’ve we this Fortunately, With and moves. remain strategy MSRP. integrators partners, uptake, XXXX remain and our supply booked adjustment we inflationary of months recent advance. to our our in market, healthy results price remaining of chain Most busy with an Mike? and trends line is capabilities. our to with price conservative that, to the a supply a rapidly smart the first solutions industry and adjustments and by out including address in momentum providing call our way living outlook resiliency over due week, competitive June share a in rising to our products The quarter look to Mike we X commercial protects discuss with strong date greater our in detail. and and business we’ve continued balanced the evolving chain while expectations. residential support Earlier expanding as adjustment making for will pressures CFO, our adjustment in We further growing own durable adoption, cost an in approximate leading many offers. affordability importantly, competitive and services blended strengthen notice effective our assess to manner to confident prudently proprietary announced our of demand corresponding rising turn high, and and our our pricing integrators utilized in XXXX in Carlet, forces I of extremely to and costs, X% updated forward the remains on has with product by that a implemented price investments advanced this We portfolio entered

Thanks, John.

financial in The April was in net driven in to to million, from sales by of on So now local up acquisition and quarter results we’ll the quarter first the first product markets acquired continued $XXX.X Staub million Networks, for late which year quarter, January ago period. Growth year; fiscal Access driven by sales acquired categories. the of strong Electronics, the previous comparable and quarter XX.X% across geographies, said, also was year. our growth overall the the X, branches the increased benefit $XXX.X Net fiscal XXXX. last ended ramp-up John year; during turn as the of this partial QX were which was in that opened the of was benefit in in which, demand

of and of most recently, Additionally, in year, we cumulative the actions from the August increases impact March in in February past including XXXX, price and XXXX. benefited taken of

sales is integrators. While XX.X% a first million proactive operating low in which XX.X% of or in measures towards for increase margin single-digits product sales. $XXX.X comparable increased contribution or from in sales mix the primarily the which period. related due performance, ago as XX.X% as which growth. and is we our and of a net primarily drove fiscal take measurement in year supply change net to in non-GAAP of the a growth to net product our represented footprint decrease local was million skews Contribution branch challenges quarter, The sales was percentage dollars chain mitigate contribution local sales continue expansion $XX.X quarter, branch a margin the our headwind of to in up deliver The to to strategy, margin, third-party

year. of as the to remains comparable important third-party our margin shop products. their local portfolio part a to net logistics integrated percentage our due net a contribution had an and the to margin relative to Contribution sales margin value branch loyalty provide related lower proprietary increased capturing the percentage one-stop footprint strategic contribution to a rate while offset chain incremental the reminder, third-party been last These seek also period product componentry a industry-wide product the as over our needs, supply of margin relative and of for expansion challenges. curated of declined of year The As pricing enhancing proposition. our enacted ago and course integrators pressures sales partially actions were We have typically broader that contribution costs products a by dollars. with

associated expense administrative finally, was $XX.X was million, sales $XX.X public initiatives, quarter as increased and first and the investments or acquired prior to and general costs we SG&A comparable expenses. XX.X% the Networks growth operating ongoing net to net ago expenses cost year becoming of XX.X% sales, which of a selling, quarter compensation increase which with strategic Our in XXXX company, of equity-based first fiscal support well fiscal recognition The as in of in did increased not own as XX.X% year quarter. in due And from the the to primarily is million Staub, up during which Access the period.

the as business of operating expense achieve realize Over scales unified a the platform. operating long we to term, efficiencies we leverage and expect the

net $XX.X X.X% net measurement net XX.X% Free loss X.X% period. cash normalizing X.X% of X, $XX.X was Adjusted period. $X and million activities performance, the or compared comparable driven net to in year in in up of to increased million decrease year a quarter ended purchases After the for income, was growth, $X or as operating million cash a the compared sales, a in the fiscal in protect against contribution comparable the expenses $X.X in April the At supply million the year-over-year capital, quarter, chain uncertainty, The the primarily totaled of non-GAAP net The in non-GAAP performance, a use year-ago $X the and resulting Net we to inventory. period. public million cash operating to operating property adjusted incurred to EBITDA decrease to compared used quarter attributable free in to primarily in percentage declining which balance measurement the is in sales cash EBITDA XXXX, the used million sales of including of to margin X.X% or by negative was percentage year-ago $XX.X sales adjusted net in the attributable in SG&A adjusted of Our $XX.X adjusted of and period. the ago strategic XXXX compared first $XX.X the million. on of quarter basis. net were net by of activities measurement in XX.X%. of flow Adjusted in from to negative sales operating as operating EBITDA growth million approximately sales $XX.X first loss in comparable increase contribution that of or XXXX, of use an months flow, equipment in net the is expenses. sheet working was of net increased a sales The to in comparable of million company-related and XX.X% of attributable ago first quarter million EBITDA equivalents the totaled end of year-over-year a growth margin year-ago net increased period. quarter offset our a EBITDA, of net primarily the increases performance, non-GAAP the three comparable cash comparable in cash

few a to disclosures additional time the addition to like introduce to or KPIs. revenue disaggregation date, I indicators formally key and metrics reported this In to we’ve take would financial performance

provide investors we the enhanced by domestic, Our with and goal or States, these our between metrics performance. with is to revenue geography disaggregated Previously, United into visibility international.

direct of integrator today revenue to transacted distinguish domestic our further now our domestic other integrated and expanding Domestic the integrated is to and business revenue on basis. domestic revenue majority between revenue. are a We represents disaggregation

non-integrated Accounts. acquired revenue revenue domestic and While such as transactions generated reflects through entities with managed other customers, recently National

third-party We our are also by revenue sales categorize introducing product a new and type to disaggregation proprietary between products.

product higher brands. to proprietary margin typically third-party Snap Snap where A to One developed services product one internally, proprietary is product. Snap contribution proprietary one One relative products a and rate under One’s Our of a and distributed generates is the has

disaggregation the on reported going disclosures forward. will a of quarterly basis All revenue be

from third-party of the the in products proprietary of to where our our third-party expand proprietary growth proprietary related network mix XXXX, sales, we XX.X% of branch The than more sell sales product So represented driven strategic in to primarily outpacing is in product, QX decrease net QX by proprietary XXXX. local of down XX% efforts growth typically product. product

transacted the the $XX,XXX annually In a a metrics, for domestic XX,XXX addition, integrators, KPIs transacting the new as a fiscal to basis, increased regarding both and enhanced integrator. number are spend domestic consistent and year-over-year metrics On count introducing have fiscal domestic who year to our ability will integrators be demonstrated we visibility provide X.X%, presented integrators our and XX.X% number operating respectively. year-end of we XXXX, integrator into domestic on key time, integrators transacting integrator. on with basis. transacting spent These we In well domestic per spend Over approximately grow spend average. transacting per domestic of of as

turn I minutes year. I’ll John, a before an on update over remainder outlook back Now provide few take to the the just for our the to of financial call

EBITDA, Snap reminder, of a guidance provides our these for key as performance as indicators for believe business. sales, annual well metrics the As overall as adjusted be to we net One

uncertainty. low and fiscal adjusting to first prior year fiscal we $X.XX effective anticipation June quarter fiscal remove in $X.XX to revised which the year compared and branch fiscal revised outperformance, expect our in Taking headwinds growth million a XXXX increase earnings. XX% as we week. and come XX% includes and respectively, X, to the range initial March on follows: increase would of We billion the that factors communicated upwardly The guidance net sales to an these an represent guidance net growth in the basis and as consideration, of Networks XXrd increase impact Electronics. will growth, Access Our XXXX are our on planned chain XX-week growth represents adjustment, the which which contributing openings. and million local XXXX XX, high our an of of our continued of net XXXX come conjunction supply guidance to sales XXXX economic represents well fiscal between announced our XXrd organic historical as-reported our XX% XX% with as our ending XXXX to new an December sales Staub after M&A, from basis, of of and believe $XX recently impact range end, the from price of volume, lapping factors the the approximately into as-reported including considers fiscal recently of completed basis, is and X% pricing to actions, impact $XX billion, XX% On of an to growth XX% headwind. the the X% week will of the in

pass revised for annualizing to one increase in EBITDA range fiscal $XXX year representing adjusted X% would and guidance Overall, communicated business, we future. our prior before an as on our we financial year-over-year March conjunction upwardly EBITDA a grow to I represent and XXXX for the to And ability XX-week $X to remain guidance approximately full well confident with compared adjusted our and expect earnings. high XX%. fiscal increase initial over of to low end, basis an We This health $X update costs a million XXXX the range, $X.X John. foreseeable of year the the highly million, guidance of respectively, increase million Presenting represents basis. XXXX as-reported to XX% to in of of final between call million adjusted an public on and X% which the million as our company sustainably of our of a in $XXX

in the Board repurchase As program enable the a yields attractive reinvestment us today’s has integrators $XX our our practice. that as of operations view through of feel the press spending our strategy. optionality We well subject to that company at potential drivers common approved other reoccurring in returns model. in to our as One end open the to amounts, allocation earnings announced may at times company’s million existing flow-generating common noted up to market stated we laws best from capital believe our prices for as we their release, to To deems the as of XXXX. maximize repurchase well an present business, valuation, stock such the the we capital through of in entrenched shareholders of shares extent transactions. our both that relationships the It federal stock investment our compelling that of current leadership business of at our Snap and with a repurchase is is conditions, the time-to-time such stock markets market authorizes the appropriate, in cash continue additional patterns main the opportunity providing These and our as areas prioritize as Directors dynamics and previously state the well our as growth governing the as

fund repurchases including That cash our expect additional to to John? like summary. back existing the for generated over my cash operations. call I’d comments. to now the turn completes balance, John from We from

for remains integration Two, strong while on continuing through our opportunity us we delivering have processes whatever take price, on thoughts, financial Priority challenges, that levers. partners in them, feel protects sustained supply to keep manner in teams industry-wide and investments productivity key Star. using to in be Number integrators performance handle Xa and might see, logistics product we’re be moving, continues and one, it the and the the partners ensuring and projects and our can through with remains that we demand our then company’s capitalize our Thanks, obstacles That’s Mike. and one their front place continue horizon. our and doing platform and priority to our chain and MSRP they a to closing the that to launches, A we’ll on work our software we North supporting includes Q&A. few diligently developments. of strategy, new focus growth

over Three, so a focus we proud year, additional financial platforms priorities our the results short value of the driving As drive And notwithstanding track ability bullish over long-term deliver we’re are we operating in we’re way QX broader with do increases adjustment current better as an growth for on of the date and and of in around challenges for integrator environment. implement believe Snap record The to will mind the public the price and that the to investing we with this in belief those company. solutions and commitments time. macro will noise the we shareholder consistently finally, for continue to long-term. model, subside more will in on operating One We remain time. a our our scale establishing capacity of that delivering on and over end consumer, a margin the

One, ahead end actions are Our for Snap be the and exciting in to With up our open a and healthy for integrators QX of us growth team, times year up we Q&A. for consumers. expect have call for our we’ll set what amazing that,

open lines Woodring [Operator questions Morgan company’s question Thank with comes Our the you. from time, we’ll for this from Erik At publishing Instructions] first Stanley. analysts. the

Congrats afternoon. quarter. good on guys, a strong very Hey

the would obviously, where have give You love But those you that us categories of follow-up. better you Pro Awards. won in Quality times competitor. to categories awards some the help the of additional just a Quest just categories. some in winning you’re mentioned detail, guys you getting maybe guys X you where knew as XX you won, understand better didn’t some Can the then for Just understand win? see maybe actually where you’re a I us And recognized, CE or

afternoon. awards that are and more big ones I’d more manufacturers product-oriented, go industry product-oriented to service-oriented. Thanks, to Erik, good The one products, sets two there’s more more and distributors. that are that ones go of are the of the service-oriented One offers. say are

are are are some in So to Where traditionally the revered distributors. tech Quality support. elements awarded distributors. there, but Quest There we manufacturer areas for like Awards traditionally are

Our be Net to XX. Score continues over Promoter

it the support solve the I team in-stock ladder chain been and say would ticks support us, a call year. need our and problem an phone is answered primarily their we think the the itself technical our time. organization that supply in I’d say finest they When and of availability. has world. revered I response they majority vast the past manifests this on

a of our well big areas are website, couple warranty brick-and-mortar areas. best-in-class; there’s best-in-class; rewards But things programs, program, other as with our like So best-in-class. best-in-class; distribution, those our

actually these things to have the didn’t provide you tongue. really of integrator have the are the win, Areas that customer. to behind stand end anything them the we So Mike, allow to to do are on they service important and don’t at I tip add my that?

the us win couple future. haven’t just that are lead the which been I think where don’t talk doing social that a ones maybe about the like around for for around think we is media us. areas in generation presence, I But focus for integrators, we – an focused we of area

you. Yes. Thank

you Okay. as follow-up. belief in story. the That’s Thanks. a just then And maybe perfect. loved I guys that that color. have love a I

buyback a starting obviously You’re program.

with million of $XX equivalents. hand, and quarter the you the On ended cash other

ratio So need stock how back business, Snap while at think desire past. levels trying target understand flow help leverage kind the attractive times to about balancing, One down we in your to in us just to should to the of you’ve X perhaps invest bring all buy to utilize communicated the with obviously the the cash

One Erik. Eric Snap Yes. the team. from is Thanks, This

flow number sufficient I the cash one, to execute the have think of confidence tremendous we in think, continue we flow we’ll generation to as repurchase think program, I on the the program. profile cash about generate business believe and

the of of remains our repurchases by we to think for business, sized growth priority XXXX capital capabilities part here balance also opportunistic and then continue of I’d well, remind priority. to are And appropriately foremost, as which really, number also over followed organic look our allocation first everyone accretive it execute I as to execution in have M&A into think as the opportunities invest important we three an that our we’ll kind about share our XXXX. continuing kind story. of and is of

to look as place, trading so repurchase price program as And of we judiciously prudent at think, capital, overall, in stewards stock that we volumes stock the and we’ll share levels. use but it’s have a of

guys. the appreciate I Super. color. Thanks,

Yes.

at when I is the think ridiculously especially somewhat low levels. stock

you, Thank understand. John. Totally

from Chung Our next JPMorgan. comes Paul with question

Hey is for assume here do the the increases, thanks a integrator second half. see obviously of we the count. between openings integrator also comment taking spend those the branch local my drive in two disclosure maybe kind like Nice if back question. the bit kind think you opening KPI nice for contribution. metrics guys, It looks How stronger. and with of could about price strength to branch coming of I kind a the spend outlook? relative the plan for XXXX on But on uptick

great. on be comments And then both So those would have I a follow-up.

Paul. Sure,

domestic for not in last we but about evenly XX.X%. growth that That split, we if think So reported we the domestic numbers the both, XX%. sales really about integrators growing was integrator between out, grew think quite year and about growth

or which but a rounded in was we was XX,XXX XX,XXX, around had it integrators, in So XXXX, within in number, XX,XXX right XX,XXX XXXX. it’s XX,XXX domestic That’s XXXX.

grew and integrator per X.X% obviously, growth, So our we year, XX.X% component pricing. saw being a of in that last spend

the the spend it more. with this year, this be took we would at we’re to look we a and year, year taking for we expect actions to actions As bit price last price

important. both and those activity guidance, that long-term Obviously, the our of both levers not both we with disaggregating the really going to the the numbers. think pressure, growth the metrics in expect some about this to we year we’re long-term, contributors that’s in of in pricing the that’s that, we’re our But those over XX-XX, guiding algorithm, it. grow the how inflationary both think around growth specific to around not But have we big on We’re and all business. impacts are of feeling

at year. path couple opening the estate far end this stores year. we continue real the on things. as a XX As opening be store the will a There’s around There of plan, our of couple of

markets, opened, and but the be see somewhere when we we to many less it that. think around spend of So yes, it for drive close goal the pretty the is and ability acquisition get because XX buying integrator openings. we integrators X, do opportunities to markets. more and those we’ll they it we might than per at creates month our the as be for might A how be in the little for those look bit clearly XX actually year, get one in end both the year And

get Great. pricing on the some for telegraphing kind ahead kind here are increases? of June, of loss a kind And the here early to as Since pickup of you’re then you of assume channel increases some well. of XQ in in I my those quite adjustments. follow-up high seeing the is

announced of We increase Monday just this week. Yes. the on

impact won’t closer see we effective the get typically June the that ahead think which what to would as of you date until of pull we increase, So is of some X. price

warehouses. have our Some actually integrators integrators vast will it remind take I’ll stock. what and to of But everyone advantage is majority don’t the use of on call the that

ahead fairly hard it’s buying but that. a for So small to amount do them of of anything

And of expect of start the June. that the increase the that benefit look in we’ll the happen half year. this of at probably so second get early won’t We all in much to see quarter. price to to we’ll And

Great. Okay. you. Thank

Thank you.

Thanks, you. Paul. Thank

comes Jefferies. Our next from Stephen Volkmann with question

broken guys, but them. see things taking questions here then for Hi good Always on get you my out thanks to more question. kind of

per – that but the data it gave. I – curious So I’m you spend was be that the priced as comparing X.X%, looks oranges, and per pricing you you based almost up may show if like integrator the all on apples sorry, probably us spend

curious, kind of integrator spend on basis? unit volume up So a per the go did I’m

Yes.

I’m – Paul think, sorry. Steve, I

challenges year, in came chain of the half supply look back at last that you the year. As the remember

year, you’re spend pricing So which that volume the of I about of quoted mid-single almost XXX% that the would that supply quarters we have also the think chain of top to on all increase per line, digit year last right – challenges, you with piece of will attributable the impact our last which be being volume to on think did. it. as that X.X% But we three impact in like

on supply that but have. spot driven we the with absolutely that chain much observation, very by challenges So

Coast the relief to next you West that supply on right. around some over kind was get And my better or think some port question chain seeing bit. Are three the And of kind that’s Okay. of going is looks supply was the improving two chain actually, do It like issues. All next situation side? of little we a the quarters?

Yes.

on. – is So the challenges manufacturing, year, there. potential on but logistics of last ports, challenges think were chain West componentry What it the about challenges when we falls an other seen delays, port our there, we the really the chain chain supply won’t based. buckets. West supply clearing the port of And of the talk Coast a we challenges, West have happen, across we Coast availability I think that’s when side that into out strikes and then – out is you the most capacity shift keep eye logistics One supply is and two

is absolutely point. chain supply impact the way – shortages, It’s We a of manufacturing not at we all dozen that componentry What of shortage. is shortages, You’re right. by capacity couple SKUs seeing challenges standpoint. a of it that from this are seeing cleared the doesn’t work. of a at Most don’t are lot much chip we’re a think impacted in logistics

proprietary are there But X,XXX have We is significant and that this over SKUs and dozens. important some pretty affecting volumes. are SKUs, pretty

closely. managing that we’re So

we they’re challenges think think a bit on this We’re those little to We making year. of don’t It’s worse. top through sure That’s where going staying that continue that. whack-a-mole. like will we’re get

think don’t to hear a find to that You out take that products you have, chip impacts about to then another we that care engineer you one, of chip a how three or around around about, replacement engineer have other port. and how you figure

lot is our we there’s be to teams, year was But better. on continue it low impact, this on we this paying the But side. much going to get year. through a of impact, the view supply uncertainty out headwind that very as not our hit side, chain obviously, team year, We continue to most a and think there as we sourcing look think logistics the we mid-single-digit single-digit year. of will it’s So We this it expect low as engineering end the close of forward. for last we attention very year single-digit to a think it. If a

Got Thank you. it. Understood.

Thank you.

Thank you.

comes with from Chris next Our UBS. Snyder question

Thank you. And appreciate all the detail in the slides, like everybody else.

in new prior around obviously, pressure declining of downturns provide or in some the in Can lot color has market business or a So concern the performed the periods you just construction? residential market about macro. how of

have those now obviously, years XX of XXXX, going some We everything XXXX, tougher and there through and times current the in been the Sure. the benefit XXXX cycle, And cycle times. have between. really good during

integrators our XXXX, even There severe transition, Chris, pivot has Our economy. business, a that interruption XXXX that I before have through cycle. the to integrators goes commercial And business commercial with not ControlX our projects. is through X/X capabilities I drove XXXX, attribute a residential crisis been would of say, I and think was the grown acquisition, to as reminder, residential just And business so it but their not roughly the the that, establishments. into ControlX’s short to to frankly might for every reason product

going new have homeowners the lawyers have bar, a apartment capacity. really They homeowner before And they’ve that speaking, built, the shown quite work a they’ll home technology is has and pivoting very they’ve office, that the conference when adept an installs of isn’t have to money room, moves at and when easy large being A it generally the that’s the restaurant businesses is or themselves money. well, And dental in. whether the integrators base. their installed building go easy, so in construction for, that so network it’s done

the our the which is of really the business, years was COVID commercial outpacing right now. business during of Our growth in tough rest shape

extent you see might you the show themselves in geographies certain to commercial integrators at adept slowing enterprises. – into down, so going resi our And

about So really we good feel that.

We refine partner have to on that’s side. as product our the portfolio side, the as have, proprietary over time, continued both more to well products third-party commercial-oriented

good And kind so current that’s concern we why of around feel the even housing the in really market.

comment. last – just integrators Our one

has all do, busy We time Our incredibly decline there integrators booked in now. they’re We the right third-party companies them subscribe are no to or that their of been surveys amount surveyed the out. outlook time.

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after the company’s doesn’t EBITDA. the less full pretty some half, follow-up strong maybe less just flow worse. guidance I are on masses – is I and you. And view than X% back look at that if a the midpoint getting at we appreciate it’s color. I When Really products, QX? and X% that it portfolio increase I for tailwind the through to chains the year then Thank all there that the guidance, helpful. both X% envelope back on price at And raise, sales my for sales. look a seem for I the like EBITDA guess mean, expect supply

an the there here? would offset my moving is, it helpful. I’m on you. something I missing? Thank be color Any is So question guess here Is parts Is price realization? there

Sure.

it’s not so And price realization.

our get rise. to to but expect price, the costs We continue

already that is so costs the just continued in offset what are costs reflected also but not numbers, And that we’re we raising looking forward. incurred are that our the we’ve

our going we adjustment in increases are the margin hearing be We’re price or margin impacted to in therefore, so pike. but that we’re also suppliers anticipated in today from contribution only that degradation forward, that additional covers putting that going – not know down were QX, and is, the we price coming saw the cost

as be guidance conservative out there. we trying to look our in we’re So appropriately

the market. uncertainty We’re trying about to think in the that’s

are we’re everyone. the be continued by is be prudent our out with that numbers. putting there. increase that with We’re to numbers we’re in for out price offset We the going to pressures that there feel confident really there trying cost putting But

you. Thank

comes Our with BMO Ketan from question next Mamtora Capital Markets.

rate point, increase, just Thank cover the or cost dollar good X% the afternoon. Hey to price on you, and does margin that cost? just the of Mike, it dollar the and clarify,

operating We’ve done should way margin. a contribution and protect our it in that margin our

out costs that So the we’re anticipating there. are

so margins to protect industry. margin our and that all our in MSRP to our with can we trying trying this invest We’re protect to continue integrators

And it so we’re in. it’s rate. margin protect should an world uncertain Again, our all

promise costs least happening, We to anticipate do thought cover today able continued didn’t the announced evolve. know we to we to to we’ll we upon the October I’ll as it’s and the that we the should spot in going in have be continues margin to quickly world not it it did has when December, you evolve continued it same and can honest, basically on But thing. on. rate. February, be realized to I’m increase at and worked be we we price in So change that going world we one based what protect and what

needed attention to So forward customers a going of and our pass well. keep their as as integrators adjusting it, lot we’ll sure along we’ll and pay to making can that

supply the of February of price the I We learned year any of first was the magnitude, increase of the at was we’ve – for in X, the last and as date think we of to kind going end things one thought last bit of half cost end we turn of – at the effective the year we pricing as a kind did around did buffer of the side. the little towards the the on this the of year in the middle economy did. add a not most chain paid

what’s have But frequency catalogs. I we proposals the have we to think them for we’ve a hard to at update absorb revise their for it’s the price They that that integrators increase have happening have. added out and And They is to go current this to reason a out they understand our of part high continue increases. just announced, price as look there. of buffer. go

itself been back increase and feedback them coming any of about possible. us, around if the keep so less kind don’t to price just from And has more

Obviously, to costs of continue increase back have magnitude reconsider won’t considers buffer integrators. rise, that to price this if coming so the we to keep that. have our So we’ll to a

Got you.

helpful context. supply you all a base just on challenges mitigate the kind on diversify the talk what side? that’s to as doing little of so as chain to you bit are can of No, Okay. kind And my supply follow-up, future

Mike?

Sure.

really very spend from proprietary in And it’s a away lot but supply Asia, so I of I diversified our that proprietary products our reliance. think of back would a say, with we number our of had we chain, have of Asia-based coming coming of products, China our XX% over out out China. of still years,

And on So of away lot flex and one our down is on our About to diversify in now reliance Taiwan. is from It we spend to X/X in proprietary reliant a to then spend Vietnam surrounding XX% products. China the Malaysia Asia. is of of – areas, very country.

diversified out have ports as well. we’re of coming the We

upon to Shanghai Shanghai our shutdown dependent flexed We shutdown, have by totally been impacted the surrounding has great. Only or not we’re So which containers other areas. been our X% ports. some shipments of

sources as We’re using we’re our other that costs modes transportation utilizing. of one transportation, alternative we’re barges and seeing in of those is clearly the margins air, which that

within place to the the domestically. evaluated make, things for region. back near But source to that the for that But of for there that relapse area from the still We think is to at brought any listen, We’ve in continue Mexico. some country manufacture Asia from. product as away them. products diversify midterm, alternatives. We looking go So we world the I we area look still we’re we primary

the year. very over. Got the That’s it it. I’ll helpful. rest for Good of turn luck

Thank Awesome. you.

from next question Our comes Adam Raymond Tindle James. with

that the at you partner on afternoon. just Good end June. the implemented start John, I Thanks. to Okay. wanted rewards of program

more of consolidate the opportunity sort that I I on think imagine. to of One, Snap the of share would bucket wallet as

months first digital And could Thanks. wondering expand on that to well. opportunities and you some early speak sounded to Just some if forward, observations I that maybe wondered interesting. alluded the as initiatives there. seeing activity you’re moving few if you of you

Yes.

spent the I years partner. based redesigning number that. a you, Component we were variety we rewards there design program of I and products two the a how think purchases design. – components And characteristics of itself. of couple thank the was of – the And the on the were awarded think one of

our because may companies it did made local have were exact our did a business then our well business ControlX The unifying there with And done second entities, partners. XX,XXX. up partner, same entities, different of Snap with actually and business part that view four that X,XXX of over was they business local with partner.

And so a had we of crossover. lot

view et cetera. and partner we they unify had So the that of to buying, were what

reach highly this at businesses, market that you of conventional to So only is portion the traditional this last we new And remembering the small the personnel. were fashion, end the of unified bring in and year able rewards Snap lot market and small of of and the a fragmented early view with can sales with a together year, program partner.

on them partners have behavior We and to website purchase products. expose our historically understand to by relied new

and get We try have products that we’re to them it. introducing

do is traditional a street that it inefficient So on with to the feet model.

together, we that to behavior individual products one and plays is piece we’ve and some that can so missing And Adam, we’ve the now run that conventional run convergence in the actual website. the to start brought which partner introduce of though, of There target past. the this, is

SnapAV start foremost, will this the and and later First year. ControlX the and that website,

of we adopt to to drive talk I to I stronger think And so those incentives because want that a driving integrators we in can how together, don’t bring component products. our call, we’ve a kind that the opportunities. that of for itself. engine, engine of too this even much rewards very of public terms second our things wallet that share terms And created important the is There’s as in will be but

to life. of So is out one seeing we’re early In starting days, as expected. expected. thing the And those really I we want excited to point results as to seeing about things are all come costs

big you’re costs to revenues. revenues is those drive, program, but when things a just going go the the so loyalty the launch you’re concerned about you new against And one of not also that

team level all think for to our going great job we align be economics our better cost share higher that. – of expectations. of that so we’re our wallet, partners modeling them meets did able to a And I a And that around to continue at

sense. Got it. Makes

a Looking forward maybe structure. Mike, to cash on that. flow follow-up just and as capital

to use the But over the help a quarter chain little you’ve understandably sheet, balance a of investing and on million had got situation. you over $XX net $XXX just about about think million debt. supply I million $XX this

that Just the table, we probably flow. about you’re you. wondering raising going cash equity can I valuation John’s commentary is about ridiculous forward. or about forward cash Thank flow investors how how presume can structure capital think think cash going how based on flow off so thinking just around and

Sure.

always we where as forward. the So we cash don’t we piece. and leverage did actually sort close, quarter target, But go We a get to know X this we’ve to this leverage said, of times that’s I continue outlook of think to of year target as our up sort in take back deploy about of this we’re it to the – lot we is sort business. leverage times like X something get going fund to this year. because

not If just you in inventory. look, it’s

you It’s and other see current can You prepaid also, inventory a of that lot as growth. look assets.

that of we number a to prepayments could do a and other lot things of chain. You supply see deposits protect kind and of the

So think piece we we expect that don’t grow. to of it,

the around million We’re times which during We and about with run jump our normal managing we X bonus of or of our QX, rate. to associated payment at that. it’s biggest In use got The we’ve Staub the put back things paid sort now, turns COVID, acquisition in the $X line on of with in cash. right averages. inventory QX. Obviously, million $X some had inventory typically historical books is

that up Year for. New build could Chinese the have We inventory we

flow the expect see much and our during even times, during So we’ll of use cash generally, cash normal the to the generation we and a then cycle going higher most is cash continue. of year, QX, to that rest in be

So going going now million driving think are is our inventory cash to in supporting there’s the forward to for fact $XX to of cash And flow the That the the EBITDA. integrators that a will SKUs is be million place of think manage. appropriate in us the business. very range. continue our CapEx crazy. that we’re to going generating confident we the that right year dozen still in $XX all We amounts couple of of for we’re despite off be that

is lead year. our it good in will City minus, mentioned we we’re the depending that moving a But which – that, might million, Lake plus other I cash and on think to than next really year $X timing we about feel headquarters outlook. we will be new when into location, think Salt or this flow

Very it. Thank you. helpful. Got

comes question Keith Truist. Hughes with next Our from

inflation domestic At you discussed the you. the integrators release, of Is you in Thank the that hiding spends you about by integrators then something or growth all spend? the transacting are and math of there realizing of the increasing the about X.X%. end number that’s seeing with some driven growth

Yes.

So hey about price August. in think we Keith, if in you last year, plus about was March, right X% X.X% increases. or minus two did one was X.X% One around

somewhere two in get And X% that, out, you year’s a is year of so of you price those sort things normalize or impact full number say last all around didn’t would X%.

pointed in the again, it it’s And is you complicated. if drove directly and be to increase. with an the transacting associated growth of per, half growth the year half integrators. X% volume And about other related spend out, around then somewhere average is newer in probably This think say which spend X.X% price so we you XX.X% would to per as integrator, just going is

increases year. those We have price last

in one the did did the we have in February, one have June. we We we

impacted last was, be price for in price obviously will half year. related. about very numbers think, But spend the we the So year, of this growth

inflation. the question, in the margin from of the Is final correct? assume there second some And timing contribution quarter, will June, release that pressure be Okay. in given still I

margin better that And of the most will of a the kicking be in Yes, see of maybe benefit contribution absolutely. We nothing QX. but increase in slightly QX, would expect beginning significant. in to price

much. very you Thank Okay.

Keith. Thanks,

question from Blair. Ryan William Merkel next with comes Our

thanks. Hey, point on gross I margin. to up on wanted that just follow last

that full you XXX basis XQ? take do back negative XQ? of when the Or does price claw cost? points it So the Is until

to quarter. the I to by going of think it, expect we benefit get guide but the most specifically third not We’re on would

I in to think bit QX should a little see very normal QX, return we those think but levels.

Thank you. it. right. Got All

Ryan. Thanks,

Our Capital. Imperial next Ruttenbur question with comes from Brian

very Great. much. Thank you

that’s if you’re out over And quick, channel integrators could given more real that’s side and issues pressures inflationary slowing any go because seeing guys the your an on out maybe there issues integrator what labor there. how installing. Just that important they’re Is down? you seeing there importantly, are you

Well, let me things. – of a Labor tough. is very couple

your engaged. our making earlier are people I own at scores, cycle looked wage highly existing on starting with our all We increase that this And engagement record in I point think just actually did year. team, a own a sure they your are higher-than-normal high. the is at do

has for retention paying been excellent Our last even year. after bonuses

in COVID. conscious about because they’ve that, labor for good businesses but past that. years. It’s or industry. all all a integrators feel top they’ve we had people two COVID the very that, time So out the on the to three have one And of been And hard remain concern fight their hiring having on number of had own in

to that think the industry. a struggle in And be continues so I

terms of that of helping we’re efficiency number integrators find with. of products to a labor and doing in things We’re around starting our work

I to our number for the do one so short-term to around recruit count – products, our capacity growing in and capacity the of has been continue our part that’s really And is installation thing more important. think why can we integrator

get important. weren’t So together. able say be to bunch during I had because things are to all shut of down will people things those training a COVID, of

conduct so our starting and for field. And utilize to local more training we’re the new sessions techs offices starting now to in

front, earlier. may there opportunity labor So that’s kind over for was softening my on the of industry already comment some it our an to that capacity. operating actually be If is

much. you Thank very

closing I’d now back this turn for concludes question-and-answer At to you. session. Mr. Heyman our to Thank over time, the remarks. this call like

today. time everybody us Thank you continue very at outstanding really exciting really our support. It’s to back investors here network thank end you and appreciate a integration contributions it QX. thanks great Snap the finally, doing in our driving partners everywhere. of businesses who I are Special to make much. joining over at who your the of turn to One. employees individuals work to look continued operator, our I’ll the you. with We experiences And for And for and forward speaking exceptional you to field,

first call. fiscal today for One’s you earnings quarter conference Snap for XXXX us Thank joining

You disconnect, now may and have a day. wonderful