REZI - Earnings call transcript Q1 2020 | Resideo Technologies, Inc.

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Operator

At this time, I'd like to welcome everyone to the Resideo Technologies First Quarter 2020 Earnings Conference Call. Today’s call is being recorded. All participants will be in a listen-only mode until the formal question-and-answer portion of the call. [Operator Instructions]

I would now like to introduce Mr. and President Vice Giordano, Treasurer. Matt Mr. now Giordano you may begin.

Matt Giordano

Bob us morning. quarter conference earnings Independent you Director. Nefkens of our Andy joining Thank for for and Mike call have On call Resideo's joined Lead today's by Teich, Good XXXX. we Ryder covering the first

presentation resideo.com. You a and our Investor the earnings of find on Relations can release copy materials page at

in forward-looking other this that the a and a Securities to morning’s uncertainties. filings Commission. may differ including presentation forward-looking with results constitute Statements remind The from call statements. factors, Exchange during made you or this in obligation no results company such as time a described and Actual guarantees any than like forward-looking number number those to Resideo’s not of facts We’d forward-looking historical statements. performance result update and are of statements of materially may the contains of those future risks from assumes involve and to statements time

during results can non-GAAP reconciliation Investor to both and which financial presentation, GAAP refer on of found our the our call information. non-GAAP to certain accompanying today, Relations Additionally, included earnings press section A in of company’s release we the of website. be is will our

I’ll Mike. the now turn call over to

Mike Nefkens

financial during update of review and final financial the liquidity Andy employees detail remarks. some support greater execution good and also COVID-XX our with begin recent responding to that and I'll is your will provide you comments will and for operating before performance pandemic. joining on well an XXXX hope I safe. and Andy to into us brief Thank Today, on events our Matt then morning will Thanks you and Resideo and on quarter families Bob everyone. call. for review business manage our He efforts the offers our how then earnings COVID-XX. initiatives. results first our some and the are go our

We will to call then your open questions. up the

residual the and and with the pandemic has in health employees, safety. the Protecting entire been best the in team customers. management well-being pandemic beginning remain the the and a swiftly of will of installers for priority continuity. goal of board our March, safeguarding COVID-XX to moved combined professional Since their COVID-XX response with primary us focus We business

financial structure time, same today's year the uncertain others, began last At to many review. and Much work this our of our are to sheet. taking times cost operations we liquidity and our end rightsizing and like strengthening balance steps of from resulting reflect

able and has the mobilize were COVID-XX created to we undoubtedly economic quickly. So around globe. business disruption

by and leadership, actions supported to loyalty. However, the COVID global we is our have very and sustain remain strong. crisis confident brands out unmatched recognized them This in operations finance foundation our review trusted and business we from come the through resulting and market and adjusted established pro-channel

now I'll it that, to over Andy. turn With

Andy Teich

Mike Thanks, for joining your today. doing and everyone hope Mike's of echo are families you to and us sentiments I'd like and well. all thanks to

as able directives Solutions to we Products today. around COVID-XX the proud the criticality a further of and #X taken United on our of to cycles result are were essential the Slide stay-at-home in and deemed review a our and and by equipment the the life duty actions underscores of Canada various in world Resideo's other pandemic. to everyday of we've be move the response increased and which support governments certain the Products international Let's Solutions States,

safety to focusing operations. and of majority while and able our As To a customers, protocols the and result, a to continuity ensuring quickly deploy our we of maintain production health activities. ensure the employees also were safety of sales on we enhanced our moved

assessments composed is a daily form customer the regards situation are First, appropriate This employee team and the of include assessments employees the deemed basis. measures. safety a of safety, COVID-XX on of employees directives and through sites as dedicated we of moved response to our to quickly and state ensure task subsequent safety driving and and actively monitoring safe business orders group with governmental who These operation any to and a force. monitoring our necessary making daily modifications

initiatives One dedicated primary the in advisories, and we with constant been intranet place. focus the area employees has site communications, and and of establishing are around specific a our regional Companywide communication country among direct world. many put

been from monitoring also have have measures, social modified full various manufacturing factory Many to elevated our distancing modifications by systems. with locations work home We remote applying temperature layout enabled employees installing support. and IT

number where a ADI the and safe provide modifications to at in distancing ensuring keeping through protect goal protocols our suppliers for made employees, other These our health with continuity taken recommended additional to manufacturing and we addition, do operational to social customers. steps effort that and stores of our In are an so. of warehouses sites being business further

some the on has COVID-XX a this our negative our said, although experiencing remain All sales. locations impact to related we locations crisis P&S manufacturing our challenges Mexico. of are Most of open had will in

significant As to or our anticipate do chain. supply we negative of inventories disruptions now, not

centers Today the majority all our open of remain remain under open. or modified branches operations vast ADI distribution and

with in environment. together rapidly supply As to constant partners are would working changing our chain you a adapt expect, to we and contact

more our are reach new capabilities, of This focus channel ways on We us they business. is take a doing to our digital want as and training customers digital time web-based as this and of building distribution for the as available to using of to fast-growing e-commerce business. full well advantage also we transition to our even including platform technology

permanent the remain search are ahead. in we for lead and forward for right CFO Resideo priority Lastly, moving and a expeditiously our to CEO days the years high the search candidates and the in

to In on we've proactive targeted in to and number our liquidity and continuity, to COVID-XX. addition initiatives execute cost a focus our steps of taken safety reduction strengthen response

greatly These decisions as difficult salary we during for easy furlough and not a implemented time. side restricting cost we a travel. reduction employees, they and impact certain the customers our business plan a were our employees On are time program

economy unprecedented a whole. the facing given and necessary the as global be will challenges industry actions these our However,

We first expenditures directors have or capital and current the for service board director quarter. of the fees restricted for during hiring entire have eliminated uncertainty, postponed activity reduced new the nonessential

We leveraging are our financial also wherever and to review takeout operational initiatives cost possible. accelerate

will align forward, we look market cost we structure with remain and manage changing our Moving and focused productivity our as cost on conditions. best to operations

more I'd in liquidity our on few address touch will highlights. but like to a detail, Bob

and our First, liquidity we the develops. have we down ensure as ample situation further $XXX million fully solely drew measure conservative as to a revolver COVID-XX

reduce net working through key underway to In and inventory process capital refinements are our addition, actions reductions.

of intend also overall of deferment quarter have initially with relationships dialogue agreed continue to We April. our Honeywell of the the the end to until certain second payments million $XX we July as announced regarding and in

financial Now, an Slide review. update on our let's and operational #X for to move

our optimization revenue on made that has management. of and As the of growth, each working and Today, Phase gross operational areas. these and margin we outlined against I'm call, review areas of SG&A have good financial targeted we pleased last share I progress capital focus; three primary to

XXXX our $XX from million the We goal to of in adjusted million $XX improvements COVID-XX of EBITDA of are impact despite driving pandemic. the the reiterating F&O initiative also

number start a volume product quarter. in and To-date EBITDA lower of lower eliminated the of terms gross cost higher pricing update, many implementing margin serve. with growth first let's began progress to dilutive revenue rationalization have we of and SKUs which a we with actions In were and margin where disproportionately

focus with approximately a In our targeted on direct value material renegotiated addition we contracts of logistics. XX% have engineering and successfully

our we align starting a made Last quarter to and quarter culture with customer market progress our and in patterns. in strategy are true that see seeing fronts direction. right we fruits organization more to discussed efficiency better demand this focused common the fully of these manufacturing during will financials, The offerings the become take standardize the is customer on tide moving design our apparent components time and the We and permeate labor to aware. but

reduction SG&A nearing our have and to we our terms XX% remaining executed date optimization, of approximately are In finalization. of reductions organization initiatives

cost plan our approximately of IT with executed services, XX% drivers. primary outside We have the and marketing indirect also being reduction

our XXXX management our extension includes X we term and call overall Since initiatives. improving have made Phase collections receivable taken QX working analyzing improving credit to processes. capital for as our inventory actions Lastly, well we improve our good have in processes as management. This progress

the have our operational position, We assessment continued footprint potential quality product market. alternatives of and to our improve developed our that speed financial and will

implemented. to as announce are process major they continue We expect this and changes

review over it turn for performance and will I Bob of structure. our a capital to Now financial

Robert Ryder

Thanks Andy.

QX with #X. our begin on a performance of Let's Slide review

impact by EBITDA was sales at performance volume offset adjusted COVID-XX. negatively towards COVID-XX by ADI was the down X% During the basis decreased down because at in both segments in on and quarter which Solutions. primarily the X% consolidated Products mix quarter, revenue The was Products Consolidated and XX% end and Revenue X% to decreasing sales GAAP of the lower weaker due performance a at Solutions growth driven part more our to and was quarter. XX% at in than began constant currency. pandemic revenues of

consistent of and cash quarters payments underlying operating agreement. the Current modified related both cash and Resideo items as our were and adjusted release XXXX. reimbursement adjusted These expense future As disclosed the to have EBITDA. not payments they are with earnings as be now footnote, prior definition not we EBITDA in will excludes Honeywell associated the in performance

previous original $XXX year at guidance deducted the payments quarter our million total we cash in for $XX payment for million which In adjusted was per cash for XXXX, EBITDA. the arriving of definition assumed

cost in research better underlying believe item change from line reclassified development years of income and this We presented. will and SG&A also We statement. reflected be goods to the the reflects costs costs This reclassifications sold practice. all industry in

XXXX we QX and performance. growth of earning call, QX expected provided adjusted our growth revenue context some EBITDA During

as compared year QX previous full the results be to As guidance. we our year expected to financial XXXX anomalous to

to was QX better in prior performance Our the trending slightly QX the expectations of impact COVID-XX. XXXX

Our those COVID-XX down on slightly on sales through what pandemic of mix actual single the finished better our adjusted quarter revenues QX impact conveyed has negative QX had a expectations started primarily today. in due finished and the call, with P&S. while EBITDA consistent digits continues end to earnings low the towards The at we revenues which better

impact P&S of results For the sales XX% Resideo COVID-XX current and XX%. year April, and down down and These down components. include revenue total other XX% prior with were ADI

opens we the economy anticipate the but we expect evolve. crisis up, will improve, revenue cannot how to As

flat of preliminary conducted have as homeowners their planned home We were customers the surveys results our of majority and completing projects. anticipate

These lost further mitigate across measures COVID-XX the include majority think impact noting, into not segment. has the our and f but we implementation taken reductions It's furlough We travel part to targeted year. recently reductions, through program. of latter disappeared partially of of revenue restrictions salary worth of this just able the moved our are all business cost

restricted We fees also directors the Due new board actions timing, a to hiring the had for eliminated our on and resutls. these partial QX impact only first service activity quarter. for of

manage our cost evaluate align Moving we actively forward, continue and structure we of with our we will can COVID-XX. additional measures to to impact will take business the

moving March. X%. in Revenue performance At increased for The app the constant of revenue see the solid AB impact On began we quarter. ADI revenue was negative acquisition Now a [ph] quarter. COVID-XX segment at the in about the to revenue in ADI period to up currency growth discussion. basis the X% especially X% Herman considering to the added finished

product increase investments revenue weaker future ADI e-commerce expansions mix, year as was in platform well the EBITDA commercial branch was headcount offset our and and ongoing revenue. by flat support to prior in line as customer

and On investments we e-commercial expand believe the big we increased a to additional channel telesales great With ADI. see for e-commerce and opportunities staff each this customers. software provides channels website improved the side, opportunity

decline Turning revenues revenue a Solutions, quarter XX% currency. of strong RTS. volumes overall overlap XX% across by security, now QX driven the down first basis in to volume lower part a constant is were XXXX. GAAP by in The was and driven in and of & decline at comfort Products particularly where on The P&S

impacted to margin compared RTS well as decline lower of as mix. products shift by Products this and quarter last lower to all margin was lower channel mix. year. Mix trade XX% The our sales product lower business, volumes and our in QX and adjusted EBITDA Solutions security growth finished unfavorable channel this connected down driven thermostats,

was down drivers Turning revenue Slide in Total adjusted reported variance and constant and EBITDA currency the of key which shows QX. our revenue as now on a to performance total company a #X, Overall X% million, negative last basis. $X QX year. revenues up million a basis currency On were GAAP of QX down P&S ADI were compared to while in $XX million. impact was $XX X% revenue

Honeywell excluded was payment and last was biggest $XX year. By $XXX years million pursuant Adjusted in $XX any volume down or EBITDA decline negative million of of the agreement. combination to QX to reduction Both $XX the mix revenue of driver in million. QX expense compared year-over-year the the cash and P&S million far down reimbursement price the

As each previously with shift business discussed, we segment. experienced negative mix

In ADI business. addition, faster business and lower experiences grows the lower total than as as a Solutions, margins margin profit ADI Products segment is Resideo

million have adjusted We benefit million headcount from from and the and our These transformation initiative year's savings another $XX programs operational our reduction EBITDA review. cost reflect savings financial during transformational reduction to previous from $X implemented related cost initiatives and reductions COVID-XX. initial

costs [indiscernible] The and salary other reduced cost reductions, reduction corporate COVID-XX cost by efforts. actions and were headcount driven

to be reductions COVID-XX expect We temporary. the

our methodologies normal to crisis business return we the subsides. the impact of As compensation

reflected about headcount was in investments other engineering and primarily as this due million there on costs XXXX. made incremental slide Lastly, sales of to $X

Regarding our outlook. accurately operating estimate release, stated by uncertainty, our full many the financial others impact results unable at our this in COVID-XX Like are full rapidly outlook, given COVID-XX caused performance time. and and the we our conditions year we market update year of we XXXX on to COVID-XX withdrew evolving

the We will impact our an provide update COVID-XX appropriate. closely markets monitor and continue to business and as on of

to take a Slide few discuss minutes liquidity structure I'll and capital #X. Now our on

a million liquidity, XX, the measure million. we In our at to which terms $XXX of is liquidity revolving our includes funds did enhance position. credit as balance and conservative our available cash under facility cash $XXX drawdown This March

investment focus continue net to reduce planned and on We capital reducing capital working our spending.

license July the In agreed approximately in are $XX payments our relationship Honeywell to in April, connection crisis Honeywell million which capital with Resideo have payables we with agreed front, improving defer in announced Honeywell XX. after QX QX. we COVID-XX payments this and of and arrangement should to agreement our receivables, we working the to ongoing under agreement. On to in million across regarding processes Honeywell until This and the continue the due passed. that $X the inventories benefit $XX trademark company includes payments in dialogue reimbursement million part as which in We expect

debt significant in to Turning due is capital structure, next our maturity XXXX.

March in of compliance with As our we covenants. XX debt were

included Honeywell agreement December XXXX our to the to incorporate credit reached payments also amendment to addition the In leverage deferred ratio agreement Honeywell, agreement. we on an the reimbursement in into

strengthening Moving will COVID-XX as our environment liquidity we pandemic. continue cash forward, we challenging and navigate position on focus to operating the the caused by

his turn to the for now Andy? remarks. I'll call over Andy back summary

Andy Teich

that In QX year-end summary, line in XXXX out call. on laid with delivered our we we results were the expectations

have we has focused business number of and began our measures March. our accomplished remain on our We impact communications our impacting safeguard negative have to in actions one and the despite and will which COVID-XX, Today, took we That customers. priority. the this our employees been

to dedication, been better deep for there they to this made decisions the want hard align us commitment XXX% employees are that cost across responded have and with to structure business. with want and we conditions situation. our We've our how underscore I how gratitude for unprecedented are I level our of of seeing reiterate proud our some we that. on to They've

Near-term our into the situation. rapidly changing remained during visibility limited COVID-XX markets

and liquidity thus focus operating actively on financial manage in remain initiatives our reduction for full-year term. great cost We forward, continue far to near review we our our a our business progress on Moving track initiatives made with will goal. and and the implementing

we cost opportunities and some to arise. actions, accelerate these to they We on and continue as will have capitalize liquidity certain seen

of great new lose difficult the also it's to fronts. that this important on times to And look it's future. term, not several short more near have longer term. to on sight the manage we area forward providing to end, progress important in in made the for While detail We product

global a an channel. brand remains established loyal with Resideo and strong pro company and scale, recognition extensive

homes, ongoing position the best capitalize normalize. have will actions begin on trusted operating We the as across opportunities the and financial we to business our wall, are execution date Resideo behind of to In well taken as conditions the to growth the review on and believe Our products globe; wall. the as

the Operator? time questions. Thanks and today to up your call for let's open

Operator

[Operator America. go to now from first We John Bank ahead. Instructions] can pass Lovallo, question of our Please

John Lovallo

Hi guys. today. for Thank questions you taking my

the curious I I'm First the on you just at down discussions the XXX believe perhaps liquidity. one step revolver have with the ticks the max if year. ratio increasing capacity on is in guys and down renegotiating planned end of had the banks leverage in

Andy Teich

handle do This John. you Bob, one? this Andy. want to Yes, is

Robert Ryder

on things. always Yes, a we're Sure. different lot talking banks hi, look Yes, Yes, to mean, John. I of

We relationship have there. a very good

we haven't we're them. It's any them about normal passed we more our specifically with know, like increasing in course just business having anything that. of talked kind revolver of - we you QX, or didn't covenants As the for that capacity conversations to

John Lovallo

And providing flex your Okay. this provide guys level. maintenance it are understanding think a then, of and guidance, down, just if that year curious should to helpful how it you CapEx kind be about may CapEx ability not maybe could we you

Robert Ryder

good question. Yes,

So this to the and lot business capital when attention started units that, was to a part liquidity, look, were more happened - we and participating. in attention great obviously spending of paying

say, we operating bit will COVID we're when - CapEx. until see, more on a clarity kind around pass, So operating of I'd necessity just

around So something we million say, year spend that. I $XX like would last capital probably I somewhere think

to for we - probably until could passes, down could cut year. I think the know, we to XX% that XX% you this probably reduce crisis that off

John Lovallo

then... And it. Got

Robert Ryder

ahead, Looking Then finally Go at... we sorry.

John Lovallo

please. no, Please ahead. go No,

Robert Ryder

spending Look, want when right. high IRR capital, projects, we we're

projects. high don't we defray So want to IRR

good we'll so what more usual. what up, back here clearing crisis as and are do to business we So in, once we be see ideas invest the -

John Lovallo

Curious have the to CEO guys potential for of you search Bob on Makes it your for and the if sense. candidates CFO. And finally narrowed number and CEO if role. then in if - a small new a the ring hats down then

Andy Teich

So we process, that are forward. Well, is this great - in is, in and going. can't this are where Andy. a it agreement the progressing exactly talk partners job. the we we but moving are Obviously that our doing Yes, way it's process an in I'm place, pleased we with until have about in

So we we soon as will a be you to candidate selected. as certainly back have

John Lovallo

Okay, thanks guys.

Operator

Capital. Imperial take Jeff can next our now We Kessler, from question

Jeff Kessler

of into reimbursement not leeway Thank you. bit Honeywell to with don't on covenant complete to - a a little leverage Could the the with getting some but hear regard - perhaps agreement, need obviously discussions like to your you're little you in discuss I'd your leverage incorporating us that agreements give going your Honeywell. you're bit those position about how more details,

Andy Teich

Andy. Bob, you update date. provide go Yes. an Jeff. the on to Hi It's and why ahead discussions don't

Robert Ryder

everyone and is Yes, crisis quarter and conversations indemnity in I the payments along discussions where look, to mean I financials Honeywell our the we sure. short-term, defray so second to Honeywell, the the as second would that knows pandemic in say, partnership right. started, I to were is payment Jeff, mentality. to because everyone's quarter going licensing and hit able date are were pretty defray the the a We second payment When more the quarter. the in with for allowed fee good us

the And will banks adopted last by in also we covenant adjusted Honeywell. the in agreed with that that addition, be fall EBITDA they ratios year agreed the leverage

So the same we're leverage covenant. all EBITDA working off

page. same the on we're So

good from so a And mentality. news that decided. I just I think was we partnership think,

a between We lot companies. interconnectivity of the two have

and page. conversations just that these what hoping on same sure is we forward, the we're productive can make So going we're continue

- continue things and that's So specific release discussions. the those then just in thing with that the were ongoing we not mush only agreed press

Jeff Kessler

they're deal line reimbursement the Honeywell. companies so interconnectivity there's much the both the to agreements, - leverage two because it is that above between Alright, with allowing you that the to

Robert Ryder

them amount last know their making payments not for of reasonable and so, if ongoing, right. some or know, products, there's we I'm you to for I as years still right. them. but we do We of make inter things understand lot of we're still sure that, obviously is these I TSA connectivity, XX buy agreement There a agreements the a

in So interest have we're a sure they vested thriving making business.

think probably in the that's second came I So those why resolutions quarter. we to

Jeff Kessler

- that define Honeywell the to your your your banks around banks actually EBITDA. to agreed And agreed question is EBITDA that to Okay. - called to It's have - as define have pre-reimbursement

Mike Nefkens

do you one? take want to Matt, that

Matt Giordano

agreed Yes. a million EBITDA quite definition the of we to bank help we because the of With nothing change, calculation $XX fact EBITDA that that leverage, of portion that the payment the this impact definition right. will defrayed the bit this, The calculation. - does

Jeff Kessler

all areas operations, or ongoing small where do ongoing - you - were what are clearly that on question and can area. actually - in the are into while or continued XX%. projects not is you most to relatively of let quarter, to the in actually that continuing large XX% in or well one those were for do commercial in seeing the And are you down, What even down you or you the first you and Residential continuing - projects, of and areas the business any is in

Mike Nefkens

Yes, sorry. ahead great Andy, - question go

Andy Teich

Yes.

- on - projects where say larger periods particular customers, what we is based generally the the it's were terms of of even allowing. sales, states that to you are know of locations the area. so are portals that's was ongoing the during that greatest and commercial state those So open the under in the bid the typically still as I work would the on the that and and that obviously our you found main those longer in project Governor's contract projects going that were term, forth of and of in our ADI reduction one most know

side, of are already to day improvements on had also the businesses continues their our we've of OEMs day. variability deemed the - also but and sales, we monitor daily some that demand degree and seen essential we well, fair in to continue a then many And P&S as still

provided call for to this month April we the point. at that think it the beyond of data I it's So hard

Jeff Kessler

you. Thank Okay.

Mike Nefkens

Jeff. Thanks,

Operator

next I ahead. Craig Irwin, Please question Capital from now Partners. to go Roth our pass

Craig Irwin

questions. this taking for thanks hope all you're and morning well Good my environment. I in

is wanted in liabilities box black million to was investors, very thing can million for the cash about chunk you be cash something your Accrued the is describe this a flow, there little of over large First quarter. has what changes or accrued that can $XX couple use liabilities quarters. I in a and maybe the ask your use there in this to that potential $XX the into next the potential were grill puts drove reverse of are cash cash

Andy Teich

Craig. to ahead This Thanks, Yes. is and we Andy. Bob, cover why go can. don't you that extent that the

Robert Ryder

sure. Yes, Yes.

looking the, years I - cash, statement, and of our year jurisdiction, payments mean, bit you, - other and the at cash made the the of biggest other funding it's the payment the the but that previous tax previous I other our I throughout on accruals different in use in accruals operating - and around thing year we're QX you're the Honeywell other prior year. was So XXX-k, can was we previous agree And tax year. funded account, a the the change the a be so believe move with big would been big XXX-k. thing in that a depending of essentially flow a to in the have catch-all the and

to accounts like XX% things So that they for XX% of were two cash. biggest that that the

Craig Irwin

this then dramatically reduced be million so now $XX fair quarter, accrual to should Okay, that's expect.

Robert Ryder

paid taxes, we because right. the accruals so the gone Yes, right

cash you're the what on that's flow seeing statement. So

Craig Irwin

Excellent, excellent.

some - on you comments trend then since the then. and environment, comments made on April specific then So right

used you that daily us you there basis looking be any - that business? for As us business? activity products, indicators look this models activity out to ADI both what maybe we and manage the figure can indicative your a you a you're Swoop, potential to try is or a to on our try at a of it and U describe or V and is short-term broader basis can for maybe the feel for a point this weekly or trends you is business might what of at And rebound in changes

Andy Teich

of but too handle the recovery look Bob know, So sorry, going I'll is this to the to number, this the of the to point, what you than we're am more about I'll handle data talk at bigger is in second issue a Andy. Craig, an I that I'll seen how we've at And the at have ask modeling to piece, better first data so standpoint. numbers ask looking variability kind of I'm there's then like question, around we part - call quarter. Bob a April I in But data, your to the this from would the say hard average, it's peg for don't point, average the terms trying just the going is this that to

at a more these ADI just the got states get specifically think to this open locations planning I we've Bob, bit about and up various talk to full-year operating little point? let for was functioning. do want you

Robert Ryder

there did on even future. just Andy's state's to also to happen canceling The foreseeable with customers, was news us probably more in you majority all survey sales points ADI that it this staying we intend these And before. the that look, should at surveys the just function P&S. came and it, I'd and say, tracking and always to have this we I'd pay really daily up to contact attention follow Andy; commercial say both than we've projects leaders the extrapolations that we're on these are good Yes. when don't more planned, canceling in look indicates will projects wide up surveys, the the they them people return, back that for of open right, had and when it's but - business

which will much guidance, point, aren't shape back going to most states the bit sales and the to what up, is is our And they will then when society that guidance a good because Andy's is, us. feel end, general, in is we different the safe on have, much money what think than open and respond, when as say May in I they would how do than industry we in trends so opaque companies also consumers we will for into just most that out April. pull how confirm survey saw news little normal. future right, better the But like pulled

Craig Irwin

hear. That's that's really really, good to

commercial One ADI, me pretty commercial the base? on have of broad know, asking you and for things last like selling the universal weeks you business things ADI office sales markets. buildings two-third construction clients coverage is is side this over the is at things your strip I really to follow, easy into a small across isn't resi into or been the but more actually of your mix predominantly commercial number at - of malls mean the the Are

Andy Teich

I a going Craig, I at power in as to been position point. I commercial address there's mentioned we're - we question Yeah, with projects. provide regard of staying the and thing products this larger detail more seen like that is to to, had level that one variability, more think we're have the don't said,

Craig Irwin

Thanks understood. for questions Understood, again well. and stay my taking

Andy Teich

you. Thank

too. You

Operator

move We can Ian next Zaffino, ahead. to our now from Please question Oppenheimer. go

Ian Zaffino

of worst just a can the performers, year-over-year focus great, numbers some of really revenue the performers? maybe very much. Hi, you you I give sense the wanted best on to side, thank on us the

maybe that the going end happen granularity give you side, categories, if now us helpful? lapping could maybe us what weather some Thanks. being be and or as any Also, Could parse on quantify on or I help - you if RTS out, far more that those. movements maybe you know could there that could life if you products as would of the

Andy Teich

to I of data we cover do Bob, do can some P&S. the that? within think Yeah, you. you want Thank

Robert Ryder

revenue, on of Yes, a say is would year. you RTS, stuff going RTS more And channel. oriented. than right. mean, look, prior indicator warmer had I say OEM, were much I sure, the and prior is best say know, year tends I'd impulse this happen be we RTS. and that for RTS as you down the were to up along probably all year sales call reasonable a to queue, we have that margin it, then more - security lower the I held I think weather and a from lines guess the was see worst the inter-segment three there's lot of business when But I'd which

traditional there more lease the people we bit held also security, lower there transition of little saw homes if tail the And take reasonable that saw RTS sales in away and were off their issues comfort But or maybe to the sales enhance connected sales take more. really a more maybe I think that off, had a security the comfort, of tail product thermostats on we little want is which On why continuing if thermostats, but we margin. non-connected and kind there. seriously from more they than offices, that's that those and bit, to seriously an their the issue up they some

year's of up saw there we last little less this to had as GRIP negative lower amount a spoken and the shift that also a was is year with and GRIP probably the we've margin But launch high in a side. before mix pretty sales us product

So it's kind mix. of profit negative

Ian Zaffino

Okay, great.

Andy Teich

are more we is this term a demand it remarks cycle overall us. comment and there's other then do the between the longer for and I'll products certainly home know and for duty than Again, that orders add upon serve, that the and homes at Andy. that demand on pretty should within to duty cycles increase we equipment fundamentally strong is. a and fundamentally the just that briefly stay we going correlation thesis prepared our of in rather to a touched but systems forecast, drive This one

Ian Zaffino

great follow-up then you relationship. the actually the that having Okay, are this It's a guys great. and - And on negotiations broadening discussion just Honeywell

amount You been Just even that Thanks. is was different company subject during than given with given has the that the and touched profile is been upon just you economy spin, payments more you done the earnings broached? the with Honeywell, to it has with somewhat the cooperation? vacation of room get know, of there the guys, cooperative

Andy Teich

terms in what Yeah, get but that we at in certainly but kind of love but yardage conversations and to feeling our point, had there. radar, of have we about depth see we'd that no it's haven't this would we on

Ian Zaffino

Okay, you great. very Thank much.

Andy Teich

Thank you

Operator

from go Capital. Jeff Please next We Kessler, for ahead. our now may pass question Imperial

Jeff Kessler

follow quick one Just up.

the areas to dashboard margins, your and you've ADI, when are IRR lower and your your and point not be have some Given IRR's products what you in to going are assuming margin ultimately as selling that and so when there your is and on are selling channels at have that what's you lower - seen selling at selling, you what is sold to that in - of come them. - this in of XX not think opposed invested have through business looking going what forward over have months, types past, that is be now time next far have more of you more emphasized of terms we through out and what to the what

you you has you've And much invest channel is take a sales and going to in, and hopefully has forward looking forward to a in been bottom and how you what be look of marketing kind not have how users at got going you your did portfolio, line putting that sold look can sold, investments what in much year, both at - to going invested where taking are a - probably the the the to your we at. channel, the end what

Andy Teich

the of year. of will or Hey, the improving that really upon of underperforming be the And some inventory downs Jeff, number the issue for that higher and poor little of the products write it. one which and heart that we're manifested great touched we review margin And bit gross have in and margin. were the in it a is we had rest a question this in as some than skews doing, of that remarks the that to eliminated revenue they QX, That's and gross is Andy. for products F&O part goes that's which review, prepared itself

to of through - - our the and But with one is - e-commerce a Bob We and there. that we we're today's consistent want doing things want investing margin on one of drive higher we things and because ADI to that have tools are and business. on world. that have part is the IRRs high of that sales end, e-Commerce Number a also couple ways front front it's CapEx to business grow those of the quick investing on business in today's that on mentioned

above now is is or products company - The lines. we generate investment the in have the our new products new within other gross total product in or margins that for replacing - at thing margins products gross the pipeline the that they're

So we're that really on focused aspect.

the gross going that Craigs that our tail we drive point duty homes equipment cycles replacements here thing going do And general on is the higher would at in does. business say is - is of to made drive what's that's parts OEM serve our, comment aftermarket that higher I end to on going there that think in within last has I the we margins than our and more business

to the feel a correlation is to extent there, positive that the So business. would we there that be

Ian Zaffino

you much. thank very Okay,

Operator

I to would Thank back now to you. Giordano like for call hand concluding over remarks. the Matt

Matt Giordano

quarter. feel next we Thanks, operator, if out today participants found The to can materials me concludes and forward questions. be free - Thank This website, look can to further today. us and you. our reach for be available you any on thanks to safe have you call. joining seeing and to our covered Stay our

Operator

Resideo the your XXXX gentlemen, that Thank and for earnings call. will Ladies you Technologies first participation. quarter conclude

You disconnect. may now

Resideo (REZI) 9 May 202020 Q1 Earnings call transcript