Snap One (SNPO) 14 Mar 232022 Q4 Earnings call transcript

Good afternoon. Welcome to Snap One Holdings Corp.'s Fiscal Fourth Quarter and Full Year 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker’s presentation, there will be a question-and-answer session.

I would now like to turn the call over to Snap One's Senior Vice President of Finance, Eric Steele. proceed. please Sir,

operator. fiscal you, conference and to welcome Great. quarter Good and One's fourth earnings full Snap Thank afternoon year call. XXXX

reminder, being a call As this recorded. is

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

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

identified results Although these statements are differ believe expectations inherent changes management no filed to materially. of we undertake based including Report reflect obligation on or company's to that and occur Form uncertainties, we our Annual call. with could in SEC. are the Risk current any latest this statements expectations and the XX-K risks on These involve the revise after reasonable, events Factors of Actual section those

of that date measures accurate non-GAAP XX, call are earnings our also in measure. the today's time-sensitive comparable release in of to contains this information All broadcast, reconciled press most as This and call only directly referenced the XXXX. financial time GAAP is March

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

be accompanying website. on Relations In results, addition our to the also posted earnings we webcast, found these supplemental have which can a presentation Investor

John CEO, to turn I the will now over John? our call Heyman.

our before discussion, by will give afternoon. and share then depth of for everyone, opening in recent a our remarks some provide financial turn performance over To that, some thanks company CFO, XXXX. and begin you us thank to followed After call I'll and Eric, well Mike this Mike as questions. for for outlook the the for I'll more our quarter closing Carlet. and results review background, the as call welcome I'll today's discuss year joining our

Let's professional commercial we joy scale. integrators One, Snap on get to and residential a a that deliver empowers platform connectivity global started. To smart and discerning begin, customers living security at to provide

a these with professional portal e-commerce growing approximately our do-it-for-me integrators, to branch leading our As network through proprietary local distributor of work to third-party our we network. integrators products XX,XXX and distribute and

We customers further serve to our partners integrator support our successfully solutions project software with them across platforms their workflow to proprietary the cycle. and life allow

in and a of to is us are front us. are our and positioning opportunity growth growth there We realize confident we durable partners tremendous this with integrator

believe we will existing to small to is homeowners technology. no continue the confident company housed US that their of the the future to businesses be millions and need. positioned We are and long-term is homes continue driver than Snap inarguable growth over homes upgrade future One. is will in of number the under and help this they built better require one of the integrate and We that will know next support It backbone formation business This technology and economy. will be will many smarter by the is professional our become for decade the

while of building managing drive growth to more Continue by algorithm the the attract will and our this formula ecosystems. strategy, Our spend uncertainty. their products partners we and remain new focused growth our is simple. on next capture through over near-term decade adoption integrator and of executing This will more driving

now our recent Turning performance. to

dynamic navigated strong fiscal Our has the entire and what in as I a growth environment, adjusted while accomplished the partners. operating a team continuing solid team integrator macro delivered for sales despite EBITDA to of deliver of am environment, for quarter fourth challenging results XXXX. we achieved year and proud ongoing net impacts we

EBITDA, $X.XXX growth fiscal $XXX delivered year, sales billion respectively. and adjusted in million the generated we of net year-over-year XX% representing in For and X%

Our last spoke. we fiscal exceeded guidance fourth time the we results shared quarter

continues as While the channel, activity backlogs remain the in businesses. integrator to their against inventory saw reduce worked steady through they we partner own in levels industry healthy QX

in as channel his will half buildup the since continuing dynamic has in on inventory. The us inventory helped of Mike remarks. but for sales XXXX, elaborate first deplete a this headwind then been integrators

smart Looking back end hardware on and us our major software and offerings both living experience XXXX, improving the for was by integrators consumers. a focus enhancing for

access lighting, across Halo, At particularly year our and/or linear X wireless networking builds which and entertainment family Wi-Fi end ControlX immersive entertainment our connection Lighting, enable product Vibrant on lighting and early enhanced provides outdoor XXXX, lineup, with Radiance, speeds technology; introduced experience; categories. Episode suite fully products. Linear a which of products points new exciting of Araknis surveillance, outdoor new We're which about control, we our successfully remotes; excited

will end new our for of products our of base installed customers. upgrade opportunities many drive Importantly,

products Electronics of significant Quality CE in recognition XXXX in for rankings identified XX the year. Brand two XXX Pro Three XX Analysis out XX at CE Top Quest of Our Pro across Awards garnered and Show including subcategories; brand identified XX XXXX services Excellence Awards; in of subcategories industry the this and January Mark Consumer Awards product

accomplishments to across past year. our also I'd strategic highlight business a like few this

released we us, and the of remote acquisition opportunities in XX/X offering. to commercial markets based ControlX a Parasol, these software XXXX. and app; progress Two, continued our security the on completed in areas continue update; Connect invest in important OvrC bolster We the service support and service displayed long-term powerful X.X.X our for growth OS and OvrC. and introduced remain We

that automation development, XXXX product Clare new in InfoComm ControlX now we the was voted solution, Best launch including Technology of and on acquired the IP of executed we surveillance Luma AV multi-display winner. Controls, commercial, is security, and manager the provider In products In Award security functionality shipping. upcoming xXX announced which home

two opening Canada of in acquisition by year-end. number total through branches American new the omni-channel QX several net local eight new branches and branches including our the This XXXX, expanded brings of to presence as we North XX in Three, acquiring of Staub. in

enhancing our further omni-channel Four, initiative.

our convert portal, We e-commerce lives in smart to XXXX in coming programs drive are well e-commerce higher partners' our we that and drive the a integration increasingly with efficacy. for living begun have to business, with a efficiencies allow years. customers significant long-term marketing single which strategy evolution easier, our us make will our believe We to made progress and over positioned

the holistic strong, success. solutions are long-term in the smart our in quite remains providing and that growth the our propel position adoption, and confident integrator Our role will competitive of living we in industry central differentiation

on first and end we around as quarter, market last business, of we the volumes our lower saw some economy its in discussed relative to softening XXXX. the half resulting As sales to impact our residential

occurring, see delays habits. value end continue are cautiousness price-conscious and levels descoping and to Anecdotally, elevated our engineer integrators in to signs more seek We partners' consumer purchasing which to project of projects end channel consumer. of inventory, integrator as impacted a response

see our have the positions. rebalanced purchased into Last in by expected Since an products supply service. partners integrator response call, are our additional over we inventory leveraged million as their to about quarters, $XX had quarter, shortages. million impact to own when they $XX the to accumulated subsequent inventory OvrC we described software of last integrator actually our And we put

of channel of towards peaked visibility, communicated. but inventory in the of the benefit QX well added the now high we've range this believe we XXXX, of previously the the end With above end

of signs Since in XXXX. we of channel the then, the seen half state strong a normalized expect second across and have destocking to reach

variety a remains market their projects, resiliency, residential adapt across partners to a diversified current model bit serve do the While to allows These to and business the soft showcasing ability environment. and remain to end busy of markets. us integrator their continue partners our pivot prove

governor their growth, tight a capacity given labor for supply. market, particularly services on demand Historically, the has been their exceeding with our

demand consumer ongoing some given So the constraints. absorbed by channel, capacity contraction the can be end in

Meanwhile, we leadership of in long-term growth extend position. invest business, continue the our to to the

have curtailing investments believe other spend that uncertain operating for prioritized long-term in in us sustained and position given places. long-term reviewed plan However, backdrop, the we while growth, areas our we will macro

are some taken. we've actions Here

Number one, business COVID in from period. the we're the eliminating inefficiencies time

supply -- our improvement driving As chain excuse me. input factors an freight normalize, rate rate, in rates and margin other costs, contribution contribution we are

expect efficiency to challenges. we of efficiency redesign and our force sales having increase products in availability in coverage we of identified not research more componentry response to by to strategic partner the repositioning and integrator Two, a development Three, areas business. other completed

travel X% in And four, our reduction resulted our with diligent of consolidation, warehouse, modest Collectively, ranging quarter first in reducing expenses. business to changes these in from in workforce about being the XXXX. of we're a operation, business, costs

to comment briefly on the now outlook turn to over I'll going and I'm then Mike. call our

remain delivering to profitability rest As XXXX, reflects operating we have to response, plan the In challenging, in end an the strong the driving environment market. residential expansion. of we heightened a expect particularly we focus margin on operating constructed operating that and look

are living strategies outsized with four, in and to and in -- capabilities to increased our outperform. enhancing including markets that existing software smart where on algorithm software through introducing platform These and local growth; and integrator new security continue will finally, new We enable the to two, adding products; growth launch partners adoption three, increasing solutions. and branches; open new executing see wallet, business, invest exciting us our across with we controllable share products; our include: of long-term with our of innovate, one, consistent continuing new service-based integrators commercial ecosystems our new and

as growth, as deliver finally, costs through pace such our efficiency to margin normalize; rate, moderating improving drive investment while our chain driving to operating to input sheet. our optimize logistics, commodities intend and balance our in productivity; and relative and supply and contribution we componentry model costs strengthening this continue freight, Further, scale

near-term And confident causes remain has current to persistent at We uncertainty a us operating pragmatic our approach in to while forecasts. stabilized macro our model. levels, demand take still,

Mike and setting guidance for detail. our accordingly will further this We therefore discuss are in XXXX net and adjusted sales EBITDA

our We macro to business believe diversified resilient partners, a integrator model will in continue strong and execution dynamic position us our prosper environment. to consistently

full I'll that, and in quarter greater XXXX to to detail. over with the outlook turn financial Mike, results the you, fourth call discuss and year

John. Thanks

turn to XXXX sales quarter the fourth Net added fiscal quarter in I'll approximately the $XX.X The from decreased, $XXX.X ago financial X%. fourth in results excluding So approximately increased quarter, fiscal million week in our net week X.X% and net sales ended $XXX.X for million fiscal comparable and the that in the extra period. now sales million year year to XXth fourth December for XXXX. extra full

December $XX.X XXXX, full million. period. week the billion fiscal increased in extra Again to the ended comparable the year For XXth, $X.XXX from $X.XXX added in XX.X% billion, up sales year net ago

increased that excluding approximately So extra net XX%. week, sales

the sales reflects drivers. and quarter net during in year several growth The

XXXX. First, price adjustments in prices, from across organic resulting growth, product including our higher selling enacted portfolio

local new branches most also contributed to net eight Several as were bringing in growth. of opened organic branches opened of ramp these year-end. branch total count quarter, in the collective company's The of XXXX, to the XX local recent

contributions Additionally, from early the incremental which benefited Staub, is company in from XXXX. sales acquired

me the about let impact a inventory. talk Now for of minute channel

view in our As the amount performed in additional his John inventory and have flowing comments, of refine channel analysis that coming inventory noted and out. to we timing and

from peaked it a when of to XXXX, Based and at the quarter upon unwind. in towards timeline second the our $XXX build warehouse within shipped end our product the beginning when to inventory before a million XXXX visibility is estimate began software, steady and that of activated is we into channel now installed over OvrC from our

the $XX the in-year sell-down line million of our in the offset by estimate the XXXX, was the occurred impact partially was For net sell-in the to during $XX that year. as we second to top the million half a first year full results of benefit half year

channel impacts XXXX On a the the were was impact an in meaning XXXX, line inventory top the growth year-over-year and insignificant basis, same there to approximately rate.

fiscal inventory was fourth pronounced channel more impact the much the in However, quarter.

million between to inventory year-over-year in XXXX. of destocking $XX representing QX growth as occurred lapped activity an that and of loading headwind XXXX, We XX% XX% in approximate million $XX quarter in to we believe QX the

quarter per As year. million we about destocking quarters state $XX second channel anticipate continued three to of a earlier, in the reaching $XX normalized of first John XXXX, before over half million noted the of the

supply performance contribution challenges chain and was now financial one required shortages and of XXXX other of impact the significant throughout supply Turning to most effort rates, year a and challenging ship expense drivers the margin, significant Inbound to the freight environment. chain persisted overcome. of our

fiscal period. half fourth non-GAAP of second ago of or in see chain to anticipate the $XXX.X XX.X% in in began that year and XXXX. or We an million the With supply the quarter, comparable sales improvement million net sales performance said, measurement contribution operating decreased of XX.X% our margin XXXX in from of to X.X% net normalization a $XXX.X

On a shift reflects our sales in typically lower relative percentage the the partially chain supply carry which net of sales margin proprietary and product offset product. performance the sales, quarter remainder of third-party prices higher margin environment by basis, decline product a XX.X% were year-over-year represented selling contribution improvement in modest XX.X% year. a year the as factors as products, sales compared dollar the In mix quarter, third-party net to net flat continued contribution to fourth the ago fourth of the the in period. the comparable and in compared to to fiscal These

chain sales basis higher percentage net driven selling XX improved by costs, net and impacts. on product supply Contribution by a prices of margin as basis, of year-over-year points a mix

or net from comparable year sales margin XXXX, year ago million XX.X% XX.X% period. full million the the $XXX.X increased of or of $XXX.X net X.X% up to sales, in For contribution

dollar in by a driven mix to by increase the net basis, third-party partially margin was shift continued the growth, contribution sales product On products. the offset

and that For sales period. margin the Contribution third-party the impacts, full product were net year-over-year by a as due of prices on year a XX.X% cost chain declined sales was net product selling enacted. mix sales, to compared basis XX.X% year in of which comparable the higher to represented ago offset percentage XXXX, supply

sales SG&A general expenses in from fourth decreased extra the fiscal lapping and $XX week Selling, of or or sales The primarily in in X% was the administrative net fiscal ago decrease and compensation million year of fourth XX% or the attributable period. quarter lower XX.X% year's variable to last SG&A million net $XX.X to expenses of our in expense. quarter

M&A, expenses expenses XXXX, or to $XXX.X expenses For increase X.X% of year from from of In in prior we the variable The sales. million attributable in the sales, full lower absorbed incurred was XX.X% increased growth net by and headcount travel new year and openings full public due costs burden strategic SG&A million net support the associated or ongoing pre-COVID of December to local and with to other resumption XX, businesses. during year offset also SG&A XXXX, in investments to year $XXX.X a branch recently year ended increased company personnel costs primarily initiatives the up compensation. fiscal acquired higher XX.X%

the full in loss million $X.X full of net $XX.X a the quarter, period. for XXXX, loss loss Our comparable And fourth of to loss ago million, XXXX. year compared totaled $X.X net of year for to totaled the the net compared million year in $X.X net a million

X.X% a Our million of net in net XX% the comparable performance, million ago adjusted EBITDA, compared or quarter or to measurement fourth in XXXX, the sales year of operating of period. $XX sales non-GAAP totaled $XX.X

decrease EBITDA of sales, These primarily XX, were X% December for or increased or And adjusted adjusted million for full the $XXX.X million net attributable EBITDA to contribution in ended year adjusted a year offset XX% of margin contribution of a to SG&A XX.X% net year XXXX, percentage by the sales $XXX.X sales a to XXXX. full as and net growth changes year-over-year net a from EBITDA the sales expenses. And up basis. sales is attributable increased of the in declining percentage primarily margin in net on as

sales, ended comparable net of or full again ago X.X% million X.X% period. or million decreased of in in adjusted from to from net XX, to for of Adjusted of the X.X% And December or year decreased year measurement non-GAAP XX.X% the operating X.X% net $XX.X $XX.X sales $XX.X or million net year sales period. income $XX.X net income, X.X% sales XXXX, performance million net a the of ago

expenditures decrease IT Lehi, primarily totaled associated to of in build-out December operating XXXX, new million cash year flow capital corporate performance fiscal ended the was and of Finally, cost. million in negative $XX.X free office flow, period. branch $XX.X The in capitalized our in attributable new with cash a compared the negative comparable ago measurement local Utah, to free XX, non-GAAP openings the year

negative inventory an in by Net driven fiscal the operating This activities against XX, of chain was in ended primarily uncertainty. increase December use cash supply cash used $XX.X XXXX, year protect for to million. was

million. Our we $XXX remain anticipate XXXX, our rightsize approximately plan our of demand level million. in the the and current first we modest At remains $XX.X based year capacity of upon quarter year. while of inventory target undrawn $XX.X end and $XXX.X continued liquidity this inventory levels equivalents including and growth fourth fiscal of in inventory approximately full quarter at we million to confident had the And revolver million XXXX, of cash cash

visibility few domestic or annual that QX We other just we And we'll a transacting key last continue count the annual regard operating integrators talked provide an domestic had basis. about after present of these transacting indicators KPIs key few in an into to And introduced enhanced basis. to fiscal metrics a year performance metrics. of KPIs per KPIs on spend integrator. the These annual on

In year domestic On transacted integrators integrator grow number per $XX,XXX transacting X.X% each. our per domestic consistent and spend basis, a integrator. of on integrators respectively. approximately time, who and domestic average of ability XXXX, we the both demonstrated our $XX,XXX and spend fiscal year-over-year have integrators increased domestic spent X.X% different with we to transacting number the Over domestic

financial turn few back take fiscal I to outlook minutes over for I'll John, call the provide before Now a XXXX. our to

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

expectation and market full throughout fiscal persist uncertainty guidance considers performance our fiscal XXXX. will Our XXXX year that XXXX our

X.X% XX, compared to in sales which the of As $X.XX an first, a a for the between and billion $X.XX fiscal expect approach to year year the of X% fiscal our taking range on year decrease to pragmatic outlook basis. to such, prior a December represents ending net as-reported XXXX billion we we're follows: decrease as

We from carryover destocking includes believe local from which channel recently expect completed to a net headwind the that inventory branch as and sales impact three, to to an small follows: are we M&A. X% year change the pricing growth second, contributing mentioned; organic and factors X% XXXX we X% to new last XX% see first, from X% previously ramp-up openings;

to to We to of compared X.X%, range and $XXX fiscal million expect basis. a an million, EBITDA on X.X% adjusted decrease $XXX an of as-reported increase year prior representing the between

drive expansion to commitment our margin reflects guidance EBITDA adjusted incremental XXXX. EBITDA adjusted Our in

expect We through costs supply well input And normalize, as rate in margin expect and contribution achieve continued think as to improvement XXXX, we management. operating quarterly we as as chain both trending this, disciplined top expense net about year. our on change each the in sales quarter sequentially percentage down our to teens line mid-to to a the year-over-year QX be course rate growth and of basis, high improve over

anticipate year-over-year second we return year, the work to in half We growth a channel the this of destocking. as through

QX expect sequentially and improve XXXX, realized additional in We to improve margin input and improvement QX continue rate contribution year. chain normalization. during versus This cost contribution margin and supply to XXXX the quarter-over-quarter rate the to anticipated reflects

From the contribution to of for we given XXXX EBITDA realize an margin net lower improvement mid-single to in return year-over-year the margin the digits rate adjusted year-over-year by remainder expansion. we QX the adjusted EBITDA as expect year, EBITDA adjusted margin perspective, compression sales a followed

date as that XXXX. of million of which of I the authorized to repurchase program back One's to from XX, Snap approval, before XXXX our Board the of last up year John, May potential Directors repurchases was of finally, a common the a stock And stock $XX approved end through reminder pass over call

stock opportunities; b, c, order: our aggregate allocation As approximately million. of we investments; Consistent our XXX,XXX of opportunistic continue prioritize finally, had a, share our sheet XXXX, $X.X with will shares an value balance M&A in strength; repurchase XX, growth approximately accretive our repurchased and of our organic we to this capital policy, at common December program.

I'll summary. call back That completes you John, turn my over any additional commentary. to the for

concluding few A Mike. we take Thanks, Q&A. thoughts, before

adjacent product opening strategy, pricing reiterate, launches, just such our branch benefit confidence XXXX, of for the have our as local growth adjustments. First, last and markets in to in commercial security, proprietary and the we year's

chain, contribution execute line disciplined margin anticipate returning in related continue our rate costs operating to favorable expense as we to to also and the trajectory, alleviate, a with model. supply We

business. opportunity uncertain that Second, and service our the and This environment, product operating to software we includes committed on of one to to developments, them. support to Even remain This strive in and platform launches. in be investments we the capitalize supporting us in integrators front integrators strategy. our continue trust partner our to all of includes their an new grow

third, way offer for in increases over as for next to and investing believe Snap we smarter We're experiences the all the types platforms, will demand that businesses better time. today And and the drive said future. and One only the consumer, become those and of the our imagine decade, can over before, we more we capacity growth end for solutions driving homes in scaling I've operations our integrator operating for margins in a

the succeed growth. We in that XXXX environment to sustainable we longer-term prepared us actions believe far took have also close at and positioning for of us the while in XXXX, so this

And the with please Q&A. call that, operator, for open

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

You may proceed.

Hey, guys. afternoon. Good

some new bit maybe just The maybe So, in that a little accelerate absolute provided. added, you then on some annual that and XXXX, integrators with transacted were basis maybe where maybe where just kind can in and start unpackage on XXXX, plan disclosures you the an us understand in XXXX that come how X,XXX in to you didn't net growth integrators of help you back of XXXX. those that to

of number -- integrators much. include so think Thanks when for per underlies with I'll integrator? think then XXXX, is transacting when that what we guidance we spend guidance your about just about my that And kind of and too follow-up the

is... This

Erik John. ahead, go --

Go Mike. ahead,

John free then first, I'll in. week. to feel good and you last Erik, jump Well you to start see

XXXX. increased of the be number XX,XXX, by to First not all, clear XXX from just by XX,XXX to

small relatively year-over-year the increase of in integrators. a transacting number So,

in security and growth, that growth good As continue commercial. to see we about think we

home have of given transacting contraction the bit tail knowing surprising is We side not dollars actually spend we relatively out a way was the long moves, there, of integrator supply chain that which little the that account, the the integrators in us. of that given with a small AV market and saw

And integrator focused per in number churn more pricing of that there all spend the us. and supply count we on there. existing really chain and year flows our mentioned, with about year were as we're growing challenges were think doesn't wallet and that clearly base concern year -- with share So we as Last the how our of lower next through, it prioritizing John next our that our partners. sales with

We're more tiers. up certainly not giving adding on

business. just In is business churn fact, retire, given going is in the to somebody their year normal going to the sell somebody every

And we to expect so add we X,XXX happen. to to we see know stay that flat integrators just over that need and

we the our for of But long-term model our we're and coming be to per our be growth. relatively when algorithm our to as integrated year sales equivalent up, share be count But integrator about build expect flat wallet. spend coming to contributors think do long-term for expecting this future from to both increase growth of we most we

that to Awesome. as Thank and last for you week. color, well you good see Mike

Thanks.

Thank you.

Paul next question comes with JPMorgan. Chung Our from

You may proceed.

my Hi. questions. Thanks for taking

rebounding demand? of the to were most softening about and ask of they about wanted guess some kind the kind from areas portfolio are kind of excited February which seeing ahead, order the Are seeing growth new for the in March. year just from integrators new that? competitors So, our of like you talking about what and And then, I product integrators are feedback some some products

at would and I year a rather This saw on answered sentiment remains call, in still mild all. February. Sure. into January, That backlogs, that on I'd their sentiment we -- to the to a, the data. saw healthy end upwards John. survey try there, is in you the saw backlog positive. anecdote, it into rely what packed remain last few than say, them decline decline questions turn try but saw we had The let still we of we -- in me but And integrator translated we rely

positive a So that's signal one. number

the industry on opposed that's and to two, product. our Number as

the Luma seeing our Luma product previous I was our around bit products, new think a product tooth. that on we're old the our in excitement surveillance

seeing And and so we're underlies software around that the platform excitement that great that.

line that consumer, a on. remote because products, including host capabilities the as opposed Halo really one, consumers a excited, offers integrators voice control, of feedback think, it's great are them something are of allows a And of I already that Our variety to so meet to family end to is providing budgets. it

I'd line that that's around product our one-of-a-kind and the more the -- Radiance host and our lighting product product, lighting that say, is products. kind a audio reception combines kind that something of great of but outdoor comes a in spring, of

have, are but to think the over wallet share adoption of coming incremental we've products we excitement. replacing I think we that view as products So significant and amount they're critical year's those of already a We created those fairly integrate to this sales. our years. other of Many

feel of So products. good to those any negative we haven't about And response had that. really any

of data release after am are well is really management any I cetera. anecdotally software of during categories with in been market. kind now would also received. the say, we had a pains that's that comes or OvrC adoption, some change out I shying And that in our our et of not in the any quarter major that products seen integrators terms away sales products, from of

great So team has a job. the product done development

that. I I've I products speaks think to upped like many awards of these only the the Board, we're the game mentioned categories, with feel And the in we're like feel we've product across the leaders we introducing.

versus year the see we kind year can well? Great. the think the of about the That's How integrated follow-up. line top to super then throughout mix we And a start some possibly product And you. RMR mix? revenue this helpful. international just do then Thank versus on as domestic

the -- revenues mix business. are already we RMR And low take in have on you we eight-figure question. RMR side, don't why Mike the the

So that XSight offering. comes software from our Parasol service offering and our

aligning revenue it's We've we end integrator the huge healthy opportunity this a against the industry recurring of model in front deliver And think a model. the us. to with with spoken about customer very

are We question? end that generally to and with the continue abreast extending to talk Mike testing you market speak. integrators mix But with of to market more with we'll favorable and do response testing you very our as line keep we product right we're want seeing guys now in a few integrators that.

Sure John.

as XXXX talk thinking we're the business. think I we and about how about

in XXXX. about in the model relatively versus we XP/XP the Within we to that that remain we would say flat talked expect guidance, mix our XXXX

XP our products. be will some We're to wallet share there expect proprietary of of of products. new adoption We drive to going continue

are our that be Now, may or we're are model. that we how would mix, about initiatives that That to we we but could think that models now that in thought looking that or launched. the certain existing incremental choose right may our guidance there in not not change at not

integrator It's might Today, today. That little business business grow domestic the majority of is vast our even a bit. our XX% our business. over of

I challenges bit of think in going international just there. the and the more little some Europe remain challenged other a on are markets with that some issues

domestic an think increase do see I our partner overall coming business share business the in slightly as you our So, of year.

so you Great. much. Thank

Paul. Thanks

you. Thank

from Our Chris Snyder with next comes question UBS.

proceed. may You

hoping inventory provided, macro it in, you. for easy just a X% growth a bit about further all it guidance. at what appreciate Because I to X% deterioration suggest resi guide the in versus on I the more but and Thank little you. Certainly seems for backdrop. to you in looking and was guys underlie And not me macro guided the days color Because for adjust organic low QX an to headwind to the I'm guidance. assumptions seems Thank double-digit the XXXX? I suggest

Chris. Sure Yes.

components to only and already week last price we Very sit year. that a we pricing announced February that that activity as Xst going we X% point and around guidance about think roughly about we of XXXX be the to growth X% midpoint pricing if really anticipate which as this impact here pricing, most I carryover our on of I'll range. XXXX. just X.X was talk of So, the I from about did effect that's today think about think took change will this of the year. in is pricing minimal We blended

of around maybe our another headwind is we to stores stores falls last think There's there a biggest a maybe which X% about growth. going or We the will small local inventory drive X% about that and headwind, out it talked of new piece is XX%, The as that be ramp-up upon depending M&A really number, how of carryover to out. X% a year point. from where X% destocks local

you is if hearing saying at all just down we're X% that a left And from so standpoint. what looking is market volume good do the to not. believe X% backlog's our some have backlogs, while integrators there still that integrators to at it with from maybe think the be. there'll bottom what we're do used from we're a the bit We a but end than capacity little lower they be And that's issue we

into the less which than drive may market. decreases Mostly backlog small some overall dip in full capacity the

a assuming market small that see year contraction activity will we and bit are housing some challenged. activity So remain the remodel this as

biggest what's the going the think happen probably about to year. out variable full that's there as for I think we

we the that feel share can time see volume performance other with we're where during to and going this there. to really And think really the be market to of ability macro out is that's good able backdrop numbers. sort then and market how I visibility number be about our perform think capture wallet we what and to does frame into the of do I up the our

one But that it's longer-term and kind really market. basis my No, over growth grow thank risk to any algorithm? you. the Thank guys the gives a labor present a obviously then you. didn't XXXX And integrator higher? that tight all can in of does multiyear color. I be confidence count. follow-up very a longer-term on that And appreciate for maybe driven It that what you

I of This Chris. And say tens intensely would who is of John. with sales our product those commercial last security It's strongly today. the year great who integrators thousands do buying home just a well in significant focused market, we others don't as sector, that there's business chain. We but helping Many there's question, are integrators are a supply of find the on was because force technology. and of smart feel

concerned inventory something new And about was able have were notion go the for. integrators out we some time availability. they recruit and So areas in just didn't being second to of

We're And so for have because annually. a to with decade forward this that. integrators looking new getting normal recruit our company efforts I last year that the acquisition a programs like bit to able back feel for of were we're acquisition hampered worked to to where XXXX XXXX

focused to driving the what that The operating wallet. of And focus where is you I we higher on is biggest sell best is feel this XXXX way our we you margins. got. customers I would do year share to got approach as say that around are like

we thousands offering. the As with the to But business know are manner. turn we of a tens operating get intense environment, attract platform and of we acquisition that integrators our product more comfortable to then machine will in there our on

Appreciate John. that

Sorry.

open all of those A branches. And delayed so do local we'll local we year. with. big serve verticals in were to to open couldn't inventory piece last year partners branches the Again, fulfill to continuing business different branches our of those local all end we that this in is the to continue

Thank you, John.

you. Thank

Thank you.

Our Tindle Adam with comes from James. next Raymond question

Your may proceed.

the Good Thanks. year. just Okay. on guidance wanted questions appreciate as Maybe tomorrow. start I I'm which John this and of I more with XXXX Mike cadence for the get sure to the about well. we'll afternoon.

year. you've QX back return think decline growth the the mentioned year-over-year to mid to I high-teens So of half in a expectation an to with in

kind of year. of this of the sort type shape to stick So hockey

about little time got that cover maybe Just acceleration as that get year wondered, to could that. bit you've if nervous the investors to expectation moving forward. levers you the a Any tend progresses,

to you. the that maybe progresses. you as Thank levers cover improvement the could So, year

we're there not but me the Yes. some -- No numbers. question, you going quarter to give great specifically, directional guide Definitely let Adam.

QX our it XX% in we're about going using now, impacts. to get to as it did in XXXX so, was around we come think, once coming come couple about the in year-over-year? somewhere XX% the that QX, clearly And think How a come points year? it's year, number we the this And to guess out headwind biggest to the I it year-over-year going because this inventory headwind, last in channel at predict going is the how in inventory here out is and way we're looking to in a and right 'XX. is headwind slight again, best be of out a QX, at QX,

it's it then and significant pretty on it first in out of QX year-over-year about will inventory model time be end that, that wound the it three fully we lap we if the right by then year-over-year basis get model year. less much on our came the this to a as So, of we get X% basis, our through a says positive issue. is time a comes should be by the out by quarters, change the QX. all to And QX, comp And

and far moves. least Now, number analysis get a the by think a as biggest in regression so But is bunch forecast, of the the that's there. don't that's that I want the That's quarterly it's out exactly there's we and numbers. to to too tied science those and model way at about

the going the they're obviously done of much February more to pricing and year. impact first impacts changes last and that were thing other half year we the done did in in in June The

more across And pricing of think variability year. in X%, other year's is you the it, everything about X%, the on there's much of impact benefit lot from the So, pricing pretty a of this flat else We'll but much the get X% half then QX numbers. and the standard not X%, only back as QX, board in activity.

up levels. rest ramp depending with pretty of on what year. But difference stores how the of year, the last the volume evenly assumptions, pretty was numbers couple stocking are The we year. throughout points of think throughout there's quarter, the upon happened in each equivalent New a what going generally,

helpful I flip could instead Mike. sheet perspective. And if maybe, That's balance question from on it. the a Got

I out actually as flow. correctly the a inventory will be that if I think, business model cash that comes tailwind understand that to

Thanks. but expectations on of your for the And if that it, I and year helpful. could any the if be sorry progression you expectations cover very maybe would missed flow cash

Certainly, end about we've the you we we'll And that guide need of whether highlights $XXX it continue QX least think Sure. externally, current specifically we we inventory be. We to for about some we to is number as Year given hard of standpoint, flow, million be But but demand. just cash to upon we think think half right give been by to and New there of product timing, $XXX as that some of about that's the QX, internal be targets. where talk depends But got QX, in. and don't we and think bringing has It's team an year just overview just the for going working really the second where we we'll that. cadence the up Chinese but end year, do ops and rightsized think, we over get think see of from at of with the creep about the million we this I'll year inventory. ended stocking and in our some

inventory will by year, a cash a and million, about dropping $XX million that to source cash balance think that tailwind the be $XX certainly throughout flow. So as we or of

with think else flow normal our outside very, that, adjusted very than capital with inventory going our we working will cash much number. very not on that EBITDA Other be

That pay of make did recently left got with of QX always don't million talk first that Our $XXX year. we liability year. There's was normal a that million of and level this activity the TRA normal that We couple was we've of consolidation. forget our payment work that QX we caveat $XX our out we're dollars we about million TRA next QX. about payment that's than until Lehi the of on more that. million don't in as got other a year, doing systems relocation. the made have around that towards that to this in couple our dollars IT another We've million CapEx But still in $XX there. have but made We TRA office

Very Mike. helpful. Thanks

You bet.

Thank you.

comes next Keith Hughes Truist. question from Our with

You may proceed.

heavy that, actually are there question you in inventory talked a Is think channel? How products a I on is? is on channel really done? specific how the that And that we you then do lot destocking, had where here. about gauge the

it's and you on question jump I'll this free to add any John, feel Yeah, a Keith. want. great color if then

about our time of historically, talked as it in a big and lot channel something last a attention quarter this we as had issue about and not talked think was paid last never we to. I we

Our as partners month typically completion. going that and installing there out next they're today next job buy XX,XXX job on integrators is week product a to

as can't partners supply their is found what complete a as think and problematic we hands paid. they really integrators can't they can't find believe on chain they it get if to more job get what products our we product, challenged the I and think became

those products about that And the out, the had that stocking switching thinking replaceability, stocking and so highest of look they costs going that to start them. on the for had said most had risk lowest up we're

there. things system like control things products So you your remote systems, are management your the like network system, ones that OvrC, are

went bunch grown. how work we way our survey, out, and your inventory did And a time sized it the we with so of has last was them much we asked partners

controller control versus at to and shipments were look took that and look our products do how many many We have we extrapolate. tried differential at very and also specifically installed how

to enabled and from trying our box doing can to that together OvrC, ops really So where when OvrC hand measure Tying and up we're first out be But for the the on and we know it that exact and whenever a it scan SKU door. and started an that that the we when about And talked that numbers bunch the product we last about time ship issue magnitude record good product of more team for with box hand data teams that's warranty online a went came in and leaves time. is our this scientific product knowing time that outbound we purposes of went work. the comes with our frame. we doing that comes warehouse, that

And all historically. and back that can go be measured we can now look

our teams was so time got it what installed. a the product asked when look back and our wait and to left say, go between warehouse average And we and

that for works only online come this again connectivity. products that have Now that do

IP those that So back our and at went products, our networking, time our frame. our primarily and measured looked products, power, we controllers, surveillance again,

it We expand. now and XXXX. did you and will to see the expanding to starting coming see time then way And contracting. frame down we expand the up see that of frame all the is of can kept that XXXX, And it the middle about middle can time how curve

can't we're that's some guarantee that thought up going that to happen main using and I those the So of maybe all are where to come what's we come you a still regression project in that out. products. it have XXXX. with going it's stays We to But there.

to addition are that other products In say we connect proprietary those or that that third-party products, then what don't also there. products might be

of last products last So some streaming of year. short the were We know AVRs were audio year. tough things very really like stock

our connected take around up think data that And about. to with talking numbers come have products overall we on attach we we other to we that put the how some products, so that the we're specific extrapolation

one And final just thing. Okay.

quarter. it first of million? had the second You the mentioned impact Is it It XX%, clear. net wasn't was in XX was or and

thing. same about it's the is interesting What's

numbers get one Mike. it looking at I but yeah, I'm the that's

Okay.

Yeah.

on to each coming three here, in $XX last year-over-year was quarter. time year, still XXXX. will coming that the out get in QX, or be $XX it's By going while basically XX% out, is XX%, flat to $XX million the be year-over-year overall to we the this because out thing impact XX%, million came same going the be that's in doing of year be $XX each quarters. or first million. should minus QX but some in it standpoint $XX and to million coming million analysis be because around $XX and QX So Again, a million million plus we're inventory it basis could change the year-over-year to But $XX

Okay. Thank much. very you

problem. No

with Ruttenbur Capital. [Operator Thank next you. Our comes Brian question Instructions] from Imperial

proceed. may You

of Great. to a just very follow-up couple on Thank much. questions. wanted I you

First of all cash.

the I a Is cash. quarter million drop understand that additional think quarter. the and in anticipate trying then you Can -- Just was year down that you quarter? $XX anticipate at to ended and third second you correct? an you're where recovery third quarter, So from that's and in first

a that's don't We because cash we think revolver. have Yeah, Brian. right, about

maintain lowest we cash the minimal balance the try So cash and our balance appropriately. to need at revolver then use we

year. about the We absolutely of about about the you if at will end We so it really in on think be with somewhat QX. then $XX liquidity, that's standpoint. think and used revolver it total start recovering ended basis. timing draw had And million a of But QX going to yeah, a of in That's from million that we $XX cash.

models point the look be of at low of we end our So liquidity should QX. in

about one then Okay. And revenue. question other

very guidance gave first You good us on quarter.

quarter I'm year-over-year on a will basis not much of be year-over-year and be a And be slightly strong, basis year-over-year on to fourth as on Second quarter So dramatically still just as breakeven positive quarter maybe then first third flow more quarter. trying then down basis? should a here. a pretty year-over-year the get

off a there, cheat good. That like very sheet It's Yeah. you was were reading Brian.

as this in around QX last volume in and bad activities year, QX year the QX year, quarter Again, some are happen. positive in year, second some channel be still be So impacts and a won't that will expectations this it bad But volume as from in other the some last as first quarter. things then won't from flat QX. as there out given pricing

much. very Thank you Perfect.

now remarks. I'd to Mr. concludes over session. Thank his you. call turn back like to At this Heyman Q&A time, the our for this closing

joining thanks an kind Snap was environment terms in specifically And us. for there many I want and just in efforts us continue of the their great today. Josh, efforts to XXXX do out again One many thank to their Thanks, our our and of operating for who partners incredible team for for unprecedented of work in ways delivering at to field. everybody in

turn back Josh. to So and thanks you I'll it again,

Thank Year us and you Fiscal for today XXXX Conference joining Quarter Call. for Earnings Fourth One's Snap Full

now disconnect. may You