REZI - Earnings call transcript Q4 2024 | Resideo Technologies, Inc.

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Operator

Good afternoon. My name is Kathleen, and I will be your conference operator today. At this time, I would like to welcome everyone to the Resideo 2024 Fourth Quarter and Full Year Earnings Call. [Operator Instructions] Thank you. I would like to hand the conference over to your host today, Chris Lee, Global Head of Investor Relations.

conference. your begin may You

Christopher T. Lee

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

including on filings would Exchange this those than forward-looking of to number identified risks We time in a and in like this statements presentation those annual from the statements. of to Actual from made of of uncertainties. We as facts company The and and principal not any Commission. that the remind call other results may afternoon's future Statements are a constitute differ or materially SEC result forward-looking with to you the and other involve such statements. number assumes during no forward-looking report and results our that factors, performance a XX-K statements affect update described may our uncertainties obligation contains Resideo's Form forward-looking Securities risks historical filings. guarantees in time and performance

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

Jay Geldmacher

joining thanks for to us and Chris, everyone you, today. Thank

expansion free is how flow Products business finished revenue global segments still Let a gross growth, delivering me how ADI that and and environment cash open & XXXX Solutions am record saying mixed. in I margin the by generation macroeconomic happy strongly, with healthy

a new Total outlook our Resideo least generated high team's operations above well record approximately financial $XXX range of approximately million, annual $X.X our of year-over-year. continued million. of was million. and in billion outlook. the metrics excellent XX% of grew our adjusted the from X% Total result we total a cash revenue Reported exceeded $XXX provided the net was grew EBITDA execution, for at all end year-over-year to $XXX As

some product positive the business volume segment. points Solutions margins and year-over-year divestiture growth increases the excludes its growth each go fundamentals, in Products in annual organic due price to a of highlights revenue declines. organic annual experiencing now improve rate to XXXX. by year-over-year. rounds net gross basis Let's was XXX all into realized in This versus continued of change flat improved revenue resulting XXXX, The & offset approximately Organic impact that in to of categories, currency Genesis. the growth substantially across and for

that margins by expanded for basis operational to efficiency. due points increased Reported XXXX structural year-over-year gross XXX improvements

thermostat the Our demand the products for launch Pro positive. in commitment to X be new was the Focus very with VISTA evident quarters. products these of continues customer And last security XXXX product in introduction and reception and to

of XXXX. excited are to for a for in scheduled and be introduced these new range We products products

of We the ADI half video run in We such the surveillance, Snap acquired XXXX, million rate growth security in soft and year continues ADI of access achieved approximately half into in control and $XX categories showing than X% during fire synergies second XXXX, progress XXXX with of and and channels its approximately to ADI and organic acquisition the higher strength. integration as overcame June after XX% residential first Snap One. revenue nicely. currency excluding expected. the year-over-year digital One conditions market product net impact very of

up growth, generation. momentum well free expansion In is for continued setting a end revenue summary, cash XXXX, and to this had strong margin we gross us and durable

quarter, talk changes to comment dollar we to potential Before continued environment Tom, for the fourth that and with Rob the strength global to the changes, to tariff price the about drivers U.S. include uncertainty off that want hand The the team detailed environment Mike are to in and and planning comprehensive increases chain tariff the including call potential remains Examples adding of address and Resideo I actions potential macro the with impact. XXXX. designed supply mixed moves. commercial address to is actions, operational prepared

call Products additional provide the who fourth & turn for Solutions. now will us Tom, quarter on the Let over details to

Thomas Surran

execution Products to fourth year-over-year by margin expand points year-over-year. for of Thanks, & another the highlighted up increased Gross XX.X%, Jay. margin improvements and margin to structural operational operational The continues consecutive In due quarter Solutions, XXX efficiency. that solid period was quarter gross was the gross of seventh progress expansion. quarter, basis

revenue. net and net the the to Genesis, organic fourth divestiture approximately currency X% of of excluding After year-over-year. on Moving declined revenue impact quarter

OEM, HVAC be continue and Our electrical retail channels distribution to strong.

in offset these security softness channel. However, by were the results

successful in of the Let thermostat by continued me be and buoyed the The and channel the quarter. within healthy. products and Focus walk growth non-connected through our of channel part the and price key to Pro in achieved the HVAC during levels connected Inventory American volume puts the HVAC shipment launch quarter, devices both takes. North

quarters. for that The posted growth products posting strong both and price percentage by OEM in boiler, increases and led spot volumes. bright demand drove quarter, furnace in EMEA other channel in was growth a for another first many year-over-year, the OEM time the double-digit

BRK home to Home near line. homebuilder to number distribution associated channels professionals our quarter. products Honeywell healthy. an of retail The Alert again third are to associated in We product safety the continued per same saw sales attributes Retail also and relationships and sold established fourth the continue to electrical our in quarter. content with an were Volumes our high and and perform quality our BRK-branded First electrical in be with both through due Those brands. the partners well increase the record trust the of in distribution strong, uptick new

market experience soft to continues channel conditions. security The

the encouraged However, X I things am in by quarter.

reception about than customer VISTA second, introduced customer First, upgrade regular positive. cadence the VISTA new targeting. I portfolio. product our security This is the product we remain were and first for And a product excited was anticipated. a the quarter among introduction new in the the very the better sales are we with to line full opportunities large of new return growth profitable as

started for Resideo my and and I better the healthier primary get ongoing comments by products of amidst been progress that profitable an is turnaround. goal to a solutions growth. making in position future operational stating business A has

goal we will meaningful believe made have progress momentum. towards XXXX We in this this capitalize on and soon

was first opportunities Electronics products at new about matter-enabled energized growth with slated of the thermostat announced Consumer the smart profitable which associated We are Show. the the XXXX, in the

achieved. As sustain products, expansion upon the and release year-over-year we new we more margin we look have gross trend to improve

turn the to let's that, Rob. call With over

Robert Aarnes

One, Thanks, the inorganic in growth Snap Tom. acquisition XX% of across revenue contribution and achieved organic was reported product in net by the ADI quarter. revenue. accelerating categories, from the growth year-over-year fourth driven broad-based Growth digital

on large nearly organic of organic X% growth include every the year-over-year not revenue currency and product represent All do from strength commercial activities was year-over-year across the growth driven quarter, unless In or net of remarks and my by the Snap impact business otherwise activity. acquisition, fourth following customer category noted. One

categories high. offset a and in achieved fire in video another audiovisual residential Our with category single-digit contributions quarter categories, saw record partially percentage low by growth surveillance category. we the percentage perspective, in the product notable double-digit product the daily From multiple a sales from average decline year-over-year

We strategic continue our healthy datacom. achieve audiovisual to into and of professional expansion verticals growth

new and year-over-year. E-commerce sequential a quarter growth revenue of sales average. dollar XX% net another record revenue achieving in daily grew high

is E-commerce investment positive gross ongoing ADI accretive Our becoming total in and contributor dollars. strategic is e-commerce to returns. margin bigger structurally to total continues gross a to yield profit

ADI omnichannel distributor. a position also investments as Our leading well

on-site product we discovery the enhanced a and search the conversion technology using an AI in almost quarter, rates. immediate experience During saw improvement leading

increased brands. XX% products about XX excited launched and the really year-over-year, almost exclusive in are new our we We revenue quarter. Net

are already across the and as more customer products offer greater We amount combined cross-sales and to benefit drive strategic opportunity. of One profitable stores engagement a more of we Snap ADI a seeing higher

Snap of nicely. going One is As very the Jay mentioned, integration

approximately We have welcoming in $XX Resideo. since of synergies run cost Snap into million achieved rate XXXX

into some signs move planned the of positive complement As our year we XXXX. early that brands' activity for exclusive seeing of we are in X consolidation store opportunities cross-sell integration,

customer-first how ethos running operations. future It is to foundational driving we is organization foundational profitable strategic and efficient an further performance we synergies quarter to execute and to integral deal our fourth Our carry growth our throughout was focus look and to achieving as continue our areas, XXXX. in momentum the

discuss the now XXXX over Let's to fourth financial our call Mike and turn to outlook. results quarter's

Michael Carlet

Rob. afternoon, everyone. Thanks, Good

basis net billion, and divestiture. excluding net spoke up Snap results, starting Rob with revenue. up into end on our quarter that impact an revenue X% organic and exceeded the straight was quarterly company and currency, earlier drivers businesses. get revenue respective of the acquisition Reported Tom total and of year-over-year One the XX% about Genesis $X.XX the Let's the the the range. high company of Fourth revenue Both total outlook

Solutions, by capital exceeding competitive margin toward points Products million resulted XX% fully driven more partially share outlook outlook We categories cash diluted company annual Total quarter, growing per exceeded and operations. the Adjusted increase efficiencies our range. the cycle in of more earnings as Fourth outlook by better-than-usual year-over-year. that was is positive $X.XX Snap adjusted well in in and per was end by range. pricing from company the generating XX.X%, by basis as the from was positive One. Total primarily driver the of The at One. & gained conversion end diluted offset $X.XX. of company quarter was cash earnings working adjusted in XXX $XXX was contribution operating gross earnings year-over-year certain up our the was quarter contribution efficient EBITDA a driven in share increase the by fully million The was This $XXX up Snap GAAP ADI. primary continued total of from high share our high the metrics per

perspectives provide me for our XXXX. you outlook, XXXX financial our let forecast Before assumptions some walk of I through market and

start Let's perspectives. market our with

the percentage high, mortgage market a to and signals Despite remains the is soft resale remodeling new outlook levels has repair single-digit the that and as U.S. homebuilding reverted and remain macroeconomic globally. uncertain. have home environment U.S. to rates relatively still for outlook market inflation persistent low is U.S. back some U.S. current growth, existing We modest cautious normal remains residential

include Jay cannot will to does then have action We Our XXXX detailed assumptions financial tariff if substantially the plans designed for tariff the current impact, as in change mitigate implemented, not indicated. changes predict changes we tariff But what environment. outlook occur.

XXXX. outlook XXXX, strengthening was of those U.S. against financial that based rates. Note currencies XX, XXXX currency XX, dollar December XXXX reflect is during Our many on December rates December

XXXX rate our in assumptions financial outlook no currency have for We future fluctuations.

to Now a than line to in growth items and assumptions. synergies to to revenue from anticipate achieve million our $XX versus year-over-year of 'XX in to We both second revenue be revenue. our we net Two annual rate business linearity our the the Snap products forecast at the solutions. target of note achieve seasonality. first higher in X. From the One segments forecast of We year 'XX on growth synergy net acquisition we rate in least half perspective, with expect updating higher half, XXXX. historical are ADI Relating now exiting ADI, run

XXXX. on call we to for communicated million, a ADT North communicated approximately with a $XXX better quarter from expect anticipated. the And expected remains to XXXX, than in Products similar previously an better residential impact hardware saw revenue synergies customer, by to with We noted, are in additional and Rob relationship. As earlier them than our Solutions, and to with long-term expected potential in continue XXXX we XXXX reduction American work security ADT fourth ADT sales we & XXXX. occur that decline we on than also results important relating some the we seeing

in We 'XX margins. is margins company margin each higher supported gross points for This gross XXX gross to in expansion versus XXXX by business XXXX. to forecast XXXX. of forecasted total versus Moving segment XXX basis

investing market for each drive XXXX strategic business and speed for to in to We growth. new mentioned ADI initiatives that This well future solutions. in product mentioned as for that the are the as Tom growth Rob of awareness products and also segments introductions the includes driving

last of and have cash flow consolidations flow We XXX% conversion net for generation evidenced higher as as years. into of In lower our but conversion over a expansions that a of primarily ERP be free implementation ratio, durable due the than in the well one forecast we new to will capital store XXXX GAAP cash income of strategic healthy expenditures engine, by system. free cash flow ADI's fiscal a each X XXXX,

financial here our these of outlook. XXXX assumptions, all is Considering

For company $X.XXX be in expect in to million to $XXX and range $X.XXX million; range we total to to the share $XXX the to per of be adjusted revenue net full operations cash of billion to EBITDA in be million provided the company total by $X.XX; of $XXX year, in fully range company the billion; range of $XXX be $X.XX diluted the to to million. earnings total

of to the $X.XX $XXX quarter per share earnings billion; of million $XXX $X.XX expect total in in be first be we be EBITDA to fully net company to to range For adjusted of XXXX, company in total range of the range $X.XX. diluted total to $X.XX company revenue billion to million; the the

with found which ranges, our assumptions, Relations Investor some earnings along modeling on website. includes Our our be presentation can outlook

upon it growth. has Resideo while investing momentum profitable closing, in and also So business is future the generated for building

product will revenue, gross synergies One to New margins in introductions expanding from operations the accelerating cash contribute Snap from XXXX. and generating acquisition durable growing and

now up operator. for the call Let's open questions,

Operator

[Operator Cory of of Carpenter line question comes from the Instructions] Your first JPMorgan.

Cory Carpenter

I a then and have one follow-up.

the hoping us bit how about more talk expand what XXXX. seems for just on it's on. new done then theme. product the a just bit you've also you tell working been a be start, what been can innovation map key that to road and and Maybe So thus to could It received, far you about a product you've certainly

Thomas Surran

Good question.

Okay.

in revitalizing And making lines receive. we product investments that We're doing. customers to we're the current to existing value our we're the what with markets in existing have start the let's product our our improve So customers categories. those

in actually we've market. the we to They've that the far, terms with I in received. were so gotten. exceeded the how response be released happier couldn't And they of of that terms And expectations have X products so we've have gone

line. going -- new In terms number thermostat in that. the continue of got whole security of products. in where where to to got revitalized new We're We've going our our products we've a offerings we're safety. coming got in we're We've line, going, product that we've offerings

XXXX So in going and see to cadence up a you coming were here thereafter.

categories that, for markets As Does And into past product new that and we get revitalizing be into the have, expanding we serve. categories then help? lines current product subsequent markets the expanding be current for that to we'll we'll customers. we new existing our

Cory Carpenter

is you're wanted And have maybe ask you would to helpful little tariffs. like just and a then for more it the Yes. of follow on up, be a you bit to But contingency Thank assuming color on lot plans. sounds you what talk chain that's what of kind can loaded feel today. plans. know and and kind just of like where of contingency you cover supply go of what could a over I you if kind through your footprint some question, but your

Jay Geldmacher

looked contact his Products division us kind with proactive remarks, this, But with, of But my been both in we've off ways. investments last at down talk ADI and now. as been the X here with customers through deepen lot a right reached go relationships hey, made customers terms paid with our out in about to you of have, following we extra playbook and Good start way, major start a addressed as examples. need let price. off to to what little it's and all as and the our to possibilities more those And Tom in Snap of years now But -- as I and sit has examples. & investments our team customers well with what -- we one In first I've years, you know, of we a we me question. going Solutions big couple on to off is of be the address give that we you all which with to a to say, color as are the the a and Jay. Cory, to know, really Rob different maybe of talk I'm few very

but -- chain-wise very what They may responded have the offset, supply depending the with other go to this all price were tariffs. reached to in way, a proactive we out a way fully and one -- few doing things and happens understand, on we we like We're thank that of saying, and together. like we'll operationally, in positive the said did fashion work

For both divisions. the most part, very a that it for positive from most response customers was

So that was good.

the about term quite up you've do that's list a can chain we in looked but to other ahead, of mean, have knows say like I divisions have that pretty and And actions in there's you of me you things pretty things buy pretty good Commercial can many exactly things which But -- straightforward operational and puts makes supply things. price, heard long do already a right? feel terms so laundry happen, But at, is I such we the in I opportunities that levers, come of the inventory what's as a terms short going who that -- term. moves, there. in us both there's have an playbook, In think comprehensive spot. comprehensive playbook we think, then

Operator

Your ISI. Daryanani of of next Evercore from line comes the Amit question

Michael Fisher

on Amit. Michael for is This

impressive. how gross much And any there revenue, that basis growth up curious about I'm the potential upside and the in maybe going margin just within that how to from year-over-year, the to improvement is points contributed margin ADI brand forward? is to Just brand on just XXX which way pretty exclusive the exclusive XX% think improvement, quantify wondering,

Robert Aarnes

Yes.

about quite think make way, So a something question, bit. -- I let great sure the I Michael, me by

to some question just the Let yourself. me go of first back

not Snap. ADI remarks on growth I with comprehensive all-in that product my the exclusive brands in was growth legacy So product, the the XX% mentioned

first. our there Snap have of to margin. brands product, the opportunity product, customer base. base, distribute ADI exclusive a exclusive obviously, any brands than gross the set see ADI to with drive obviously and higher have great mix accretive our which especially brands, overall we the opportunity, with hands combined that those was customer now And in But of be level to just is the going larger significantly to Snap we we exclusive legacy those So Snap a get

So for you focus area Does that can for to be the a foreseeable expect future. that us help?

Michael Fisher

Snap coming forward. the you looking you're One, where you also are talk expectations, that? already than stronger then both bit about Like anticipated? And of Can are and definitely. on looks well what what's realized synergies like ahead a benefit Yes, just seeing in maybe driving you

Robert Aarnes

Yes.

I'll So just to that X.X first months get really to the what accomplished $XX prouder be close. of million and say, couldn't team just post

pleased how to state, But say approached the the answer of terms majority I'll So manner that we've The of right how which happening, the is that, we're in part question to really your your integration. front. of progressing. and really in question, attribute cost the just other is integration so that just from with I'll up that's that entire I

think team is go business then at we've that act call legacy understand the has each to opportunities us together taken accelerated allowed leadership to steps include as leadership is other's next to time a early identify next make subsequently with those the those. layer the took of these bring post market to and organizations is both of last That to down. starting XX-XX to of and down and on lot sides an on Snap as both really close. businesses' My I allow faster layer the synergy ADI We those on of rate I teams. and the said our best we sure

also, be delivery exit we behind is will that mentioned, in that number third of million 'XX. deliver driver, driver million And to continue $XX what to So north the Mike of that as year. $XX the primary the as

Operator

Woodring next question Your comes of of the Stanley. from Erik line Morgan

Unknown Analyst

] [ Woodring. Katy of is Erik behalf This on

your in you production lot facing are similar of I that Would question competitors And most of have So a just there's then issues a say where Mexico? follow-up. tariffs. on a

Jay Geldmacher

of our in of but locations, in Some competitors are competitors other Mexico, some are too. our

you as we've So it's at review comprehensive might a my mix. as of done, part that teams the have all that. guess, looked And

-- it's of different really manufacturers. in it's So of a locations mix terms

some guess, are our As competitors you China. in might of

-- mixed just it's it's So really bag. a

Unknown Analyst

that's demand brands you describe of ADI. expect And e-commerce. pricing areas time in to me. just still competitive it And in would in over you growth in to exclusive Like translate you record on power terms ADI, mentioned the the market would for how And your as strong of pricing?

Robert Aarnes

Yes.

question the presented pricing height year more your saw of maybe would the of first. that So certainly I then majority pressures. competitive. more we in became in of the a I'll large say throughout QX, was our and those and really The last market headwind That year take second competitive project us where commercial QX. for business the mix

said, and in point bring are channel e-commerce the of the as fact, business, right, the . the great business well more However, that X you that parts up, margin-accretive a from parts as of exclusive of margin-accretive brands. most

bringing the new our omnichannel try of experience, year. mix making investments higher in this year are all market into geared X drive to well those And next the as categories as to are products and we

single QX. greater should investments pricing I'd say going not unlock don't future. disciplines ERP We we QX, mentioned, any the -- benefit of -- we I I deflationary biggest Mike that impacts the and forward. which we think, from did to mentioned, along all are for in those do those us pricing, with in going all can our that last I of that us and in of along thing have also were the the think time with lapped we capabilities any had expect in that's

Operator

of the from comes Oppenheimer. Ian of your line [Operator Instructions] And Zaffino next question

Isaac Sellhausen

the towards latter I a video, some Isaac question 'XX. some the Snap My and of you've strengths could organic have for half you And growth on fire, the on some Ian. ADI for that One, is and there on This between then details ADI growth seen just follow-up. if is assumptions of the Sellhausen provide drivers of main maybe of

Robert Aarnes

I this XXXX about Sure, right pipeline deliver at being would to level. say, especially think and you. a now, record opportunity because look environment I I optimistic commercial is What it macro ability remain Ian. say Thank the time, the as that at I And in I cautiously despite our last remains mixed. said growth categories, I our into

very backlog project our very, very is And remains bid level healthy. Our very, strong.

So business, gives to look, ControlX QX to same dealers. to year. lot we're a pickups be expect that and with me year especially able continued Snap see to that throughout our seeing throughout And in continue of from confidence from line into growth doing XXXX. we the -- we're them going nice They the delivered this generally the expectations

Isaac Sellhausen

business, Okay. on It's the just Snap growth this I One. guess, on large then Great. year. follow-up very to contributing And

maybe expect of sort margin as of assumptions you there. growth and what as some your and drivers far accretion Just

Robert Aarnes

Yes.

think mentioned I answered. question on I the So this I last

Snap to last business. First launching products same be to launching products. launched of continuing new all, I We're we year. new accretive mean that over will say our products to this thing is year. I new that the continue incredible XXX do at

to the So enhancements products, that later in early are a CDA map. experience. There XX at We several be quarter. launch second is ControlX quarter, with strong that very coming including this the road announced user going

opportunity think there's we So there. some real

complement represents real there a e-commerce a overall Snap able ADI mix as is to take again, as than expand product opportunity drive customer of all, to in base higher to the to line well. what's which, customer the then the base, we be second channel much Snap happening the on into margins And larger

Operator

conference no questions you There this further for time. This concludes call. Thank are all today's at joining.

You may now disconnect.

Resideo (REZI) 20 Feb 252024 Q4 Earnings call transcript