Snap One (SNPO) 9 May 232023 Q1 Earnings call transcript

Good afternoon. Welcome to Snap One Holdings Corp.'s Fiscal First Quarter 2023 Earnings Conference Call. [Operator Instructions]

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

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

this being call reminder, a As is recorded.

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

our would may future management additional events of performance. but forward-looking to financial remind begin, not statements, response make like in or questions, we contain forward-looking future we everyone Before expectations, that your prepared statements limited remarks and statements to including, to,

be placed statements undue not These not reliance performance, guarantee them. therefore, and upon do future should

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

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

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

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

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

closing some outlook for review discuss open the some the quarter results to turn recent that, background. for and as follow our over thank remainder our provide I'll Mike us in then to more today's questions. for CFO, I'm this I'll company the joining and the it Carlet, the share of call depth afternoon. remarks, After I'll we'll to give begin you a discussion, performance. of everyone by as well Eric, To going that our year. and for you, thank he'll quick financial

right. All

Let's get started.

at that One, provide discerning here global and integrators reminder, customers platform security we a to smart living commercial a and professional a As on residential Snap scale. deliver joy, to connectivity empowers

to customers of XX,XXX so with them the we As professional because distribute experiences work call do-it-for-me to these love. approximately that through portal branches. invest integrators, in and our and third-party growing these we expect network and partners distributor deliver We integrators our success their in leading integrators a our e-commerce our jointly ours we invest local products to can proprietary

workflow tools integrator small will will partners the software part to end investments, of to Many software industry across and support they help living use. is them on the technology to these smart Snap to allow and we aim solutions customers construction successfully business our adoption, formation continue products, including tailwinds, enablement, install, Secular durable. As with platforms technology is users forward. software, cycle. life provide services serve housing and right seek We it to believe the integrate the project and we partners these our smart workflow living At and opportunity support One, propel opportunity. the capitalize the professional with large proprietary to

our on briefly just comment me Let recent performance.

the EBITDA. and has first In resiliency that the results sales in XXXX, team serve. we $XX.X and our adjusted $XXX steady. million remains our the environment, quarter environment of Our in Overall, strong highlighting we delivered net uncertain million an quarter partners in demand first generated of model business

they as partners own to backlogs to do cautious Our as their stay news. they economic though continue busy in through healthy work businesses, remain

to report building in climate, for production entry-level markets has budget more we're high-end for the and end conscious hearing expect may we're projects that current pleased macroeconomic residential cautiousness and you As remain consumers the slowed, commercial some resilient. but

Our markets, to environment. our a end variety diversified to of to us integrators allow the across ability product current and pivot partners' portfolio projects supporting serve model business and adapt

slower productivity velocity We the believe after Finally, to levels. over in the the in normalization several and destocking. we've we of a destocking pace to peaked tremendous the since the expected. towards at appear years. the Last XXXX, first inventory have project we last ongoing in second noted of of the this quarter, have rebalancing channel channel channel natural continued signs end quarter quarter, of This the although that also we inventory seen seen a sustainable is than

inventory after rate growth compares adjusting the headwind gains. market channel destocking delivered broader first positive the favorably a reflecting quarter. while We year-over-year approximately X% this growth estimated for the we continued to in share our the remains industry, impact, adjusted Importantly, year-over-year believe of growth

products As end marketing and the and sales to remain the we earn profitability services, the a partners' key on year, remainder experience I of with think improving higher quarter our first about new focused launching and and along initiatives look One, share strategic while performance consumer the ahead of initiatives for year. the partners. of to the wallets X our

the relationships We the several with year the opportunity positioned well growth opportunity partner and two, a centered production context I'll on through expenses. operating and multi-pronged expand to software, attack and our products following approach, we existing periods see to wallet. of are with a service the and costs We and uncertainty. this of our start go-to-market key of share supply quarter minutes focus address significant spanning outlook. rest believe COVID chain our expanding take and our of results programs both few operating first And margins I'll in excellence.

fully enhanced on family and wireless platform across control, and and first XXXX solutions exciting product surveillance including Electronics of software ControlX delivered Consumer builds in a enable the Lighting, our audio provides Living immersive Outdoor quarter, Wi-Fi Halo, on Year -- new the and Show, excited enhanced with Year software. entertainment remotes, the Award -- about introductions Winner, our access lighting successfully which and of points, Episode the particularly We of Product me, Luma connection X family suite innovation networking. Radiance, lighting, speeds xXX new which solutions. capabilities of outdoor experience, We're our solutions, Araknis Linear new excuse First, of all-new outdoor which technology, high-quality products Vibrant surveillance

portfolio strengthen from and a launches pipeline our for exciting innovation These foundation One. strong product Snap continued set a robust of

a one, we for the of of Shifting also refine to important product many these the forward Importantly, to wallet complementing of go-to-market took strategy end new including have continue our continued with first go-to-market drive our to products order to drive steps better several opportunities in upgrade to customers. for to our drive will programs installed targeted share our to time efficacy transacting exposing single them save our portal portfolio, We we've and our partners. program our to marketing integrators growth. base we incentive programs to and quarter, consolidate partners' business, money in in products. efficiencies Two, drive while higher us e-commerce and loyalty allow our convert our leveraged

These at a of bringing category programs Snap partners' North One. and adoption moving strengthen And to American to roughly results. opening triple designed we XX the strategic Florida ecosystem the expanded presence partners coverage serve efficiency, Myers, branches new our more to and local structure reorganized us overall opening by active to model, Three, communities. quarter. enable total continue location, our formation omnichannel to our believe partner inside intend focus Fort their in towards by to sales our product number will to of drive are the we end we branches relationship finally, and our We an drive this team with sales

And final is finally, the pillar service.

members first the voted for service proposition capabilities. We XX by compelling to to professional as we Our our Pro humbled their for is our exceptional vote XXXX Quality our reflecting value CE integrators. underpinned award-winning thank In XX for quarter, Awards and across One service. by in earn of Snap Quest confidence excellence partners their were service categories, team

second driving world but margin operating past normal has the Our initiative years. is been anything expansion. X strategic The

places. continuing growth, uncertain profits that while other in expanding to the margins. that to position heightened plan have spend a curtailing backdrop operating we prioritize an operating our optimize will constructed and us believe and in for we in reflects long-term review focus operating Therefore, With strong delivering our cost structure are strives plan to on long-term sustained investments macro areas we mind,

few quarter in and benefited here. first lower results to done input has of chain from team one, ahead as componentry chain rate. logistics, supply Number improvements costs commodities margin financial freight, A drive our and our our have our contribution the points such areas driven strengthen excellent supply expectations. work and They

investment reduction believe of our is management efficiency operating remain continued disciplined contribution we our three], we on we realize focused additional on have we and our margin the X% several year a track in drive are quarter, activity cost following completed initiatives that that on the cost first upside through us focusing plan full scaling Collectively, environment optimize expansion of benefit on margin working Two, programs and with [Number year. productivity. to workforce while for cost rate and the as modest base on a easing. rate move drive the margin about improving contribution

will Jeff Snap One on of company opportunity departure Jeff want become things of a that to an from comment first a built with report amazing some An our industry. came for transition. to effect Swenson, departure, comment team Marsh, company. X the as on the over him me past I With in our has as to Hindman's outlook, to done sales Before I Marketing. great directly Ryan smooth years. of the has SVP CEO outside well Ashley our our marketing, and of Thankfully, Jeff's and Sales, will EVP Jeff --

in our We our full drive years strategy to ability ahead. leadership's in the have existing confidence growth

Mike. move And margin me our turn operating remains seek destocking and over the position. solid our outlook on it liquidity headwind, year past to and as then drive outlook we now to XXXX our full expansion comment channel let inventory Overall, enhance

inventory top We a pragmatic persistent maintaining term. and performance uncertainty of view channel macroeconomic the destocking given line in headwind the short are

provide that our into Mike improved our our net adjusted cost for However, contribution will tightening rate discuss which us EBITDA XXXX, visibility guidance for in we With mind, our the management and profitability outlook and are further strengthening with disciplined detail. raising sales margin structure in year.

competitive living success. differentiation continue to grow. durable the and macro dynamic The We industry adoption will propel a going to enable environment is smart long-term to in continue is solutions our holistic and role -- central to the providing in us integrator prosper our believe adoption living of smart

the that, Carlet, discuss our 'XX And to detail. greater it Mike? and Mike CFO, turn I'll with to first quarter results over in outlook

Thanks, John.

of a Now the performance high let financials, level I just and our into provide on specifics some to me the financial get context start before at outlook.

we factored had in had As planning, we inventory softer mindset growth the assumptions. of but we channel and our into all economic approach around we the a XXXX, pragmatism also that dynamics, environment, volume our a

a to the of and Given chain drive we of inside this to focused variety COVID the business, mindset, especially subside. supply the have on begun and actions contribution improvement margin operating headwinds as

So we smart invest investments These notwithstanding the current and macroeconomic continue span we internal are for operate us products, activities across the investments growth, see. to business more that living technology given help new go-to-market efficiently. tailwinds the important to secular uncertainty, will continuing

We're places. funding investments these by deprioritizing in other spend

validate results our quarter first Our approach.

our has team of some on remains cost efficiency focused Our initiatives further and improvements. accelerated

with value execution products to Our price. business our end we are both performance believe are share. of and allowing resiliency partners strong consumer, helping the pleased These adding strategies than the already and differentiate this tough our team rather and paying launches pricing model We're and on us of they dividends, in our new our product us gain the are environment. to

inventory reflects inventory So to to X.X% quarter for our first now XX, financial million ended of approximately headwind period. John XXXX. a We approximately destocking in that first March in fiscal year-over-year in of adjusting headwind quarter line $XXX comparable inventory of turn decrease channel for approximately we sales results channel Net in the year sales estimate the quarter XXXX during million destocked representing year-over-year channel estimated After in ago X% approximately occurred XXXX, The sales growth $XXX.X anticipated that million. this from $XX earlier. million net decreased net and million in mentioned impact, the I'll the sell-in $XX of the quarter. delivered top QX QX $XX the

Let's channel a inventory more our and this expectations. bit talk about

typical channel carrying At $XX to inventory channel although a peaked and our to XXXX $XXX we unwind. and of over XXXX quarter, middle 'XX, believe originally build than beginning the of inventory in last a XXXX, that of middle million pace in destocking at began above levels bit that's the continued of slower we at we the anticipated. remains end QX by of partners. over discussed Inventory million estimate of before QX approximately As our

adapting new that decrease normal overall we're time inventory may both As headwind. as we higher level to be survey our partners, as would of our hand, integrators normalization hearing well our which destocking on a to

range With outcomes slowing a this the of is appearance practical destocking in mind, broad, over the last X of the quarters. rate with especially of

our operating the end performance million fiscal of year in sales of guidance will the As million, million $XXX.X margin, now, measurement by Contribution $XXX.X and continue or destock end ago X.X% and assume models first net period. increased was XX.X% to year net full the quarter. XX.X% this of $XX This the representing approximately of sales of to in continue comparable a non-GAAP XXXX.

or inflation, ago response investments. the chain our efforts ease cost first to in Contribution The in period. of to fair XX.X% fiscal and margin has general percentage begun million to from through macroeconomic increase rights, $XX.X XX.X% of increased value in strategic net adjustments cumulative our and the impact long-term supply attributable from costs, absorbed administrative Selling, as a price or net growth of conditions. severance $XX.X general input to costs sales was expenses some million expenses and comparable enacted quarter adjustments which sales of investments, to primarily our through M&A in value and branch of both the increased due net compensation, increases in equity-based X.X% contingent recent new local year SG&A continued sales

these partially were So controls a offset efficiency by on continued initiatives. cost and focus operational increases all

million measurement of EBITDA, in of basis to period. a or change offset million Adjusted $XX.X X% $XX.X $X.X contribution the primarily sales growth increased performance million the adjusted $XX.X SG&A totaled of in those loss by loss net million the to This on a dollar net comparable operating net quarter 'XX rate in Our ago compared first was compared sales quarter ago or of totaled both the attributable in net a period. to non-GAAP comparable EBITDA in first X.X% year and year expenses. margin

or or of comparable the $XX.X Adjusted expenditures. totaled performance ended offset the million net $XX.X $XX.X primarily The in measurement income, quarter measurement XX.X% an non-GAAP in cash March was compared $X.X net to Free million X.X% of free in sales to ago from the decrease year flow, XXXX, cash decreased X.X% to net in period. operating in a cash fiscal negative first in of negative a of another by attributable million flow non-GAAP period. performance sales in XX, increase capital million used year ago net activities, operating operating increase

activities decrease cash to and March million new increased operating capitalized 'XX, negative office $X.X year-over-year, million fiscal our was related onetime in inventory in expenditures of costs $XX inventory used period. was a to in year our used of primarily year-over-year the continued decrease negative compared growth This Utah $XX.X compared our due our corporate year. build-out the ended Capital million attributable net prior reflects cash quarter in in driver initiatives. operating activities Net Lehi, for to in to levels. cash to first for efforts rebalance net the ago the primary comparable XX, to The used

end and total continued of undrawn At first million fiscal had $XX.X and of position cash anticipated. end revolver in approximately to liquidity QX, the quarter, see $XX.X in equivalents of of Since the cash $XX.X including as improvement million liquidity, we've our million. the we capacity

to the target to the million end remain by continue thoughtfully communicated levels previously reduce of on work and to the level inventory inventory year. down track We our $XXX

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

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

persist market throughout 'XX strong Our our uncertainty fiscal well quarter will as expectation guidance that ongoing our considers as XXXX. first

As adjusted full our our ranges full sales year such, year tightening EBITDA our from guidance previously we outlook. increasing published net and are

between expect and XXXX prior billion, as-reported year to represent fiscal the billion of ending a basis. an compared X.X% net decrease to year fiscal the which range We USDX.XX sales to X% USDX.XX XX, December in would on

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

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

We cost operating through management. input expect supply well as as to contribution disciplined through as and achieve margin chain rate expense improvement this fees

As noted already and our previously, are in we strength area this continued coming expected contribution anticipate the expansion rate quarters. in outpacing margin

from our think to On year quarterly continue we 'XX, inventory year-over-year channel the margin second return top quarter. execute we saw the a work a contribution we first as the positive in about the results anticipate growth we through half perspective, strategy in in our and trending to as So growth line destocking. of rate, better-than-expected

anticipated While to from to an our contribution quickly acceleration chain of the the of worked course expansion over deliver team margin we QX costs 'XX. margin in that year, supply originally the extract diligently of rate in more more

the Therefore, 'XX this and before to adjusted contribution year trend outperformance. call margin to the we we EBITDA to second an 'XX. strength back QX continued year-over-year I One with prior improve period update to EBITDA on From pass comparable opportunity the to over expect similar a continue half margin modestly for adjusted perspective, expect of basis an John. through final

of year, from $XX repurchase repurchases our approval, 'XX. of last a program 'XX which May that stock As to of of of end Snap Board was common XX stock authorized date a through One's million the potential approved reminder, Directors the up of

allocation had common $X.X at the prioritize following Consistent XXX,XXX March of stock of million. capital to aggregate order. XX, we an value will in of approximately our with As continue our approximately policy, repurchased shares XXXX, we

sheet fourth, organic second, balance our accretive third, growth and opportunities First, present our themselves; opportunistic M&A strength; investments; our repurchases. share that

financials. back turn call over to John? John for commentary. summary the That completes the of I'll our additional

few remain believe best Mike, growth thoughts bullish before closing model. our the one, reality. we operating decisions And and we our we market aspirations thanks. we're hit quite around A navigate current right to Number Q&A. longer-term making

have have margin returning the operating favorable continue as in to alleviate. trajectory our rate related to costs we already and chain supply expansion to margin XXXX, contribution our plan For confidence started

new in on openings, overarching -- investments, offerings Second, growth to proprietary we us in upon of an in launches, their and partner markets partners business. remain to support continue committed founded we capitalize to that be our software local the is security, commercial such front trust strategy. branch the support additional and grow of product our opportunity operating to This in all integrators uncertain them. and one Even as our adjacent strive environment, to

And types customer, us will Snap for growth the close One this increases sustainable last environment prepared We've position before, all that in operating so growth. imagine also the only believe at can time. the will that believe decade, to we and better businesses our all and and succeed drive smarter of that I've become third, the way next for of demand over end said longer-term the a we in as in have more us platforms invested solutions Overall, homes and those scale and today present offer in integrator actions driving for experiences capacity year for year we the for will the future. far we over margins

for up Q&A. And we'll open with that, it

comes first our the Erik And with Morgan Woodring Stanley. from question of line Instructions] [Operator

some the that end of but weakness wanted the some incremental at end. and to end kind about a at the talked low I higher made, into comment you of or incremental John, resiliency low market, dig you

exposure lower at of I is then is, have you historically then guess one, an sense projects what And that weakness But that indicator us of you does at know are two, most anything much your a low any can kind higher give reading or And to follow-up. question end at I the at all? too is for the just have the if that it? so for end, into I high my of end. a maybe end, early And X-part

good question, think I Erik. Well,

think we business but been production space, look, in our it's had that's build building. into because that, all recent around has we've something exposure I a on can I that the production monitor see certainly, has know, fairly -- weaker, been low-end think entrant as we're that side security that we and the fortunate numbers more And slowed. the large in bit a you part as we're

And so that have integrators we some focus that market. on

one. number that's So

don't reason pivot even and trends built sort you working like integrators the bars for it to to we look see of at believe those restaurants ability model because similar in higher-end number that higher the us. two, that, and look kind today they're issue any the of end. looking -- think around if where at commercial of the Number the capabilities of things of technology for is you conference really their that and integrators on places homes homes with if establishments, to And rooms and being kind creates we in resiliency at the shift like of their the capacity. where And that's

leading that? standpoint. So about a think watchful it's I Mike add couched from you that, don't our indicator. would managing we're Mike, anything to But guidance, accordingly being we're cost as think and I a

think think think how be we feel about I resilient, very I happening uncertain again, on. about great higher-end But John, right And be world. do an out there. and those prudent uncertain No, appears there, in the what's spend as world and it's were we trying an to we to still we're

makes up that from Mike, sense. you. some both on contribution your strong totally XQ. on very comments follow of margin. the of color No, Obviously, to I maybe And then, appreciate

you margins in implied somebody improvements forward alluded then maybe the you improvement. pulled I that comments -- into last to of from talked into contribution quarter, and sequential But we XQ. some XQ XQ think about to,

the seeing the me. be we're better all seasonality we to That wanted across strong just a year rest the of board into if I out of parse that's about get really would the uplift? quarter contributions So of for to helpful. And just maybe and from think or move the maybe March understanding as how

Thanks, question. Erik. Great Yes.

of definitely great bring teams first the that some saw in year the we'd that thought some to opportunity we we So quarter. in see work later our from into

of improvement are expect So some still QX. we we where off in

QX, is think contribution number. is I our above think the just margin I XX.X%, XX%,

we're it's going expect a be to little But up upside that still to but quite think line with drive I go QX as in be on improvement and mentioned, feel QX, quarter-by-quarter to we there in sequential into in it and great and given bit John we pulled QX And teams we we from that to it what I land from like number. the bit opportunities think feel we identify some a to still that expected, expectations. continue the forward. And that continue won't might about work where there

Perfect. Congrats a quarter. on good

Thanks, Erik.

Thanks.

One And moment Chung Paul your next with your comes question. for next JPMorgan. from line question of the

And are of versus those wanted to How dynamic had in for of a some the year? expectations bit pricing those have demand move products year? a variables of follow-up. nice And what I where then we benefits, as kind ease of some kind quarter. the you're trend? seeing So did full on year? do know the through And across balance volume momentum the your the I you kind ask I the for pricing

momentum seeing Paul. Sure. feel part question, jump to you that yes, But it, of great and one. free John, we're from first product I'll standpoint, where a take on take want to the if to

you thing as That million out in $XX this headwind. is inventory $XX in we about think $XX and about channel million when last as think the I QX, expected, think XX% first was between year almost million swing year. the the that

about thing we $XX of million first think just [XX%] out. at coming the a So if math that decrease, sales year-over-year about you well, that around the look say, and X% is

we in price last then And of June. and February year X% in year did increases X% last disclosed, we as

you about impact so of pricing. those, quarter impact, at look X% from And the in quarterly a and the sort take that's

about, to think some about remain. this as that, is bits the where that is volume think full else talked or of think smaller get flattish quarter. John And But so performance expect not we'd in demand it's the else and I and and underlying the underneath that going down mentioned, point to pieces. assuming say everything year we everything organic as the it, we're for X flattish generally, to we year, year. better And volume is we We're we our than

long-term, a lots think months year, we going we're It's long-term. be for still view there's taking secularly of We of think upside. as about the this to prudent where we're But just last X% we're pricing June that standpoint. Obviously, to we that's lap and off flattish remain around those. the increase going thinking fall from year's as will benefit February X% increase

We we small So impact by X. a the time did QX, the this almost pricing get is only to very price increase year.

as channel see well we that chart organic you posted growth pricing from impact the off And inventory the clearing and can there. is so you a then and can just think with falling flattish the about out that as

it. Got

products And early of introduced a launched. you your add I'd were and second question, part going fourth of the into were seen just in I'd to channel on to and in that new be quarter and to saw the on at CEDIA the those later think the you products say lot that, first I quarter, say, now the you've

new And cameras and combination so the that, our we X software with Wi-Fi now the getting points foundation the access into are of outdoor Luma behind season. [inside] Araknis, surveillance, the xXX

of Halo year. this last Controllers a The industry. and So the is inside the product. kind of launched Lighting Radiance initiative Family big CORE our New combination year Remotes our of

the our around that or that. I'd those both or software And connected products so Vibrant Lighting will families seeing OSX, would the we're are ControlX The in will say initial to just of and lead our the of And integrators say is of coming most future where the beginning. that in what terms long-lasting. know that to there of products launches products is these one it's what's platforms, OvrC be momentum. future I

then expected. kind than better much free cash flow And performance of Great. Okay.

the reiterated there. of dynamics think talked as kind You marked on the year. inventory we about the And exit going you then I inventory

So how the up flow cash then looking cash location And the to added an It stores like do boost? free in raise overall better additional more get this year? are the looks you quarter. think of flow, open incremental for kind revenue guide about profitability you and given the we year and that outlook,

Sure, Paul.

the inventory, of on focus putting started see yes, we've it, lot and So we're a to benefit.

I on that. to free the quarter, ahead work seeing was source monetize we the go at million, down don't get us existing going to benefit some and of $XXX expectation end million an But and inventory flow. get in the expectations our supply which be be from million and a to and of need by clearly, great the teams the inventory of when through lot our a cash that's we're it. end $XXX of year to be We to Again, to $X if going of we year the from actually where our think guide inventory to utilize able of liquidate we're cash that of start standpoint, dropped of righted. our we the to chain quarter, will as

good about we go that through. as really So feel we

the between got for we've the openings, opening, digits store local X the year. on a rest X plan something of then And mid-single for Yes. and

here in activity. a we've store got a a to not slated Opening Raleigh couple open next few weeks then think leases. I fast store is a more and the

the you to build-out. the find the got do sign got You you to got to location, lease,

to think this we the of for a of have pretty year. line happen rest I So going what's sight good

capital flow as be forward will that. thinking so as free how go free to And do next up about cash we year more we go we we certainly deploy

We investments And looking out we're that We some there, into small M&A have at store -- contemplating. deploy that we're we could new in at. some stuff products openings. can there's look some opportunities

there's opportunities So no we lots invest -- business consider. us for lack in the to would of that

Very nice Great. Okay. execution.

Thanks, Paul.

moment your question. One for next

Your the UBS. line next Snyder of from question with comes Chris

their customer Are how and an the hoping big color being integrator the activity was at doing any level. So update Have integrators? just some they with just Is integrator of backlogs? eaten of at more on on base activity backlogs -- pipeline still those they or I into worked kind how to the in update all? get the looks? working is of kind

other Thanks, normal business. at it I have months' carefully over downward trend you say still, a of worth seen level small a watch at still basis We at a a the sensors very in years at we on XX backlog. of couple if Yes. and in high integrator Chris. more that look would demand a It's very backlog. right

So comment the make. that's I'd first

majority are again, make new second speaks find leads and we above that, to to is, I'd new customers backlog. ability integrators, to as business the and feed that our The finding that our survey comment vast integrators', go beyond

has say news. would optimism that that's taken call a after market, months much think of all good there little I to few need that out a been And just of get in Again, emphasize the downturn of now too to. I own their for upward. I'll there's way I our a what bit work And to turn integrators always

are housing there that starts view we housing as all news and to. of to sales, And so get have the in like integrators even things some work plenty our reductions though,

may some capacity. sensors actually And they've had demand a that macro of our in there work can level the so fact pullback integrators be certain only as things because through we view that

Appreciate Really the the you Then just could I just that, made John. up follow on if comment integrator. around helpful.

pick here maybe edge. What leading to kind think of their up do on think the I driving that? you back started is optimism have

businesses the COVID are as over cautious a X this of that's performing their yet well. think I thing return since certainly. biggest that plenty we've it the Yes, see news there is days they gotten now coming okay, lot driving negative back of they're that being cycle cycles, into homes been there's work. But business There's that, is continuing the commercial months are past to built. they to still people months, X see to still

as was they're And nicely. so further more what backlog quite businesses they down to get their to a up seeing be their supposed continue holding and cycle, perform I into think is

question next Securities. the Keith Hughes One comes of for your moment line question. next from with Truist your And

of it rest for will On the take big expect do on second it reduction the and quarter you that in call, year? talking the be on the remainder we've tail more to then or the the of off this inventory about ratable been a that year, hit

the I think rest more now, right year. of ratable the Keith, it's

a went about like single channel, know go the last out it's our can happens over to that. to that what's and think inventory look dynamic We talk -- we Historically, still out talk as not come try I X back just what we assume we about it's are every know months. month. as the But inventory it look. as coming in, looking we we in understand there out, as in I'd we the future and

Yes, exactly. Yes.

in going to the thought we QX And in out the that upon was future, I based there. come look as pace more out was

said, again, guess. We going and I something think to a we are to bit I $XX as think my I not it today. to as come level about a out some sit expect all predicting That's think at that crystal some it's QX little partners if best higher is guess, communication come million, still QX least our going all that ball in of They're more QX adjust it's here to think we out. that and of as And to would I but getting try from I come maybe I inventory. out. we're

$XX And so of $XX million doesn't $XX come maybe maybe $XX or the instead million. out, whole it's million million

of I will and this think I confident we're normal, starting year in is next we I the then going think are pretty be this into And it. through year will pretty is think year. to X wherever happens year. But we how pro ratably about think like by with I is be a don't Whatever next end clean QX going happen the the the quarters to new next think tail that drag

And Okay. small you for or on smaller at working to projects. financing? to they jobs, situation integrators, them bank huge capital least for by banks, small just small question financing give a products tend -- they there's financed be the do the do type commercial banking given use and receivables or tend Do your on of businesses any sort

to pay or that typically product, buy of deposit. it. individual to to a the that I That's project a on getting get end progress product, install consumer, want speak well-off flow. very deposit a the just that a that operate there'll don't project. who would consumer they for they'll I generally, they They'll business out billings They're use be entire is from to project. great on using that Keith. back the is deposit going tell the But throughout you They're cash cash some question, on industry. typically contingency

never a significantly out third-party as heard financing anybody bit a not using I use business. us. have you financing talk about projects, differently? do little that's lot of do John, They of but portion hear anything So a There's end there. of

emphasize, for I of they they're their to like and think to lines business I things use size like want finance not and think our more No, on really revolvers credit -- their like I might. -- customers dependent businesses, banks

your Okay. competitors that. do probably correct? are be And use smaller, they Would that

product on think the with with banks. with the Samsungs, on with we're would that, more And compete are competitor. going more And majority not I I probably of of don't I and there's who very distributors partner susceptible think more -- the companies certainly side, way, a we're small but are most companies, the public than the a but by say, are. dependent more dependent then dependent generally on large -- compete other Samsung is they what's business smaller probably we to think distribution speaking, I one we distributor on

question James. from with [Operator line Instructions] our comes the of Raymond And [indiscernible] next

of couple a me. points quick for Just

any could what in international the one, months you trends demand you you're on just couple of on seeing saw So past helpful? touch sort would be international? And over just of color the

thanks. -- So

challenged little bit business. domestic our our international overall, think, I business than more has a been

market. not you So know, as one international, is

We centers Canada. have in distribution

in the U.K. We them have

have go direct And we're the through and in We Australia, cover in the all distribution most those rest. world markets. of of the through rest them we to then partners

I And and it think down. definitely is up

interestingly, a be fact, I the looked market, U.S., bit think the more might has first in pretty region little APAC just quarter. right U.S., a than U.S. bit has U.K. softer. little looked like a over now, has even been particularly the little almost the the bit the stronger like much The challenged European Canada

as regionality international that about markets looking little bit little bit markets a that the total, different domestic a you there. think softer out that's in than at. just we're But So overall, the are

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

partners shareholders, team today. joining speaking part again, thank and and end and great everyone, our much, the Thank very members on of continue shout for everyone you a great work to with our on to much very we forward again the to of quarter. the who do Have evening. at our of you us behalf second Huge out look

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

disconnect. now may You