Resideo(US:REZI)2024-05-02 20:16First Quarter 2024 Financial Results Financial Highlights & Management Remarks Resideo's Q1 2024 net revenue declined 4% to $1.49 billion, with net income at $43 million, while Adjusted EBITDA remained stable at $137 million, supported by segment performance and transformation - Management noted Products and Solutions segment performance drove Adjusted EBITDA to the higher end of outlook, with improved margins despite market headwinds from high interest rates and slow housing turnover4 - The company is advancing its transformation via manufacturing optimization, cost controls, and the planned Snap One acquisition, expanding growth opportunities24 Financial Metric Comparison | Financial Metric | Q1 2024 | Q1 2023 | Change | | :--- | :--- | :--- | :--- | | Net Revenue | $1.49 billion | $1.55 billion | -4% | | Net Income | $43 million | $57 million | -24.6% | | Adjusted EBITDA | $137 million | $138 million | -0.7% | | Fully Diluted EPS | $0.29 | $0.38 | -23.7% | | Adjusted EPS | $0.47 | $0.51 | -7.8% | Segment Performance Q1 2024 segment performance diverged, with Products and Solutions improving margins despite revenue decline, while ADI Global Distribution saw revenue and margin contraction Products and Solutions Products and Solutions revenue decreased 6% to $620 million, but Adjusted EBITDA increased 9.4% to $140 million, with margin expanding to 22.6% due to cost efficiencies - Revenue headwinds stemmed from lower volumes in Air and Security, particularly in EMEA and due to low U.S. housing turnover, partially offset by First Alert and price realization6 - Profitability improved due to better material costs, reduced freight, lower direct labor spending, and a $13 million reduction in SG&A expenses7 Products and Solutions Segment Performance | Metric | Q1 2024 | Q1 2023 | Change | | :--- | :--- | :--- | :--- | | Net Revenue | $620 million | $658 million | -6% | | Gross Margin | 39.5% | 37.7% | +180 bps | | Operating Profit | $112 million | $105 million | +6.7% | | Adjusted EBITDA | $140 million | $128 million | +9.4% | | Adjusted EBITDA Margin | 22.6% | 19.5% | +310 bps | ADI Global Distribution ADI Global Distribution's net revenue fell 3% to $866 million, with Adjusted EBITDA declining to $58 million due to margin contraction, despite growth in exclusive brands and e-commerce - Bright spots for ADI included 7% growth in exclusive brand sales and 1% growth in e-commerce, now 21% of total ADI revenue813 - Gross margin decline was attributed to reduced inflationary pricing benefits from 2023 and lower product line margin9 ADI Global Distribution Segment Performance | Metric | Q1 2024 | Q1 2023 | Change | | :--- | :--- | :--- | :--- | | Net Revenue | $866 million | $891 million | -3% | | Gross Margin | 18.0% | 19.2% | -120 bps | | Operating Profit | $49 million | $64 million | -23% | | Adjusted EBITDA | $58 million | $70 million | -17.1% | | Adjusted EBITDA Margin | 6.7% | 7.9% | -120 bps | Financial Position and Outlook Resideo's Q1 2024 operating cash flow improved to $2 million, with $603 million cash and $1.41 billion debt, while Q2 and full-year 2024 outlooks project continued revenue and EBITDA Cash Flow and Liquidity Q1 2024 net cash from operating activities improved to $2 million, with the company holding $603 million in cash and $1.41 billion in total outstanding debt Cash Flow and Liquidity Summary | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $2 million | ($4 million) | | Cash and Cash Equivalents (End of Period) | $603 million | N/A | | Total Outstanding Debt (End of Period) | $1.41 billion | N/A | Q2 and Full Year 2024 Outlook The company forecasts Q2 2024 revenue between $1.51 billion and $1.56 billion, and full-year revenue between $6.08 billion and $6.28 billion, with operating cash flow of at least $320 million Q2 and Full Year 2024 Financial Outlook | ($ in millions, except per share data) | Q2 2024 Outlook | Full Year 2024 Outlook | | :--- | :--- | :--- | | Net revenue | $1,510 - $1,560 | $6,080 - $6,280 | | Non-GAAP Adjusted EBITDA | $130 - $150 | $560 - $640 | | Non-GAAP Adjusted EPS | $0.43 - $0.53 | $1.90 - $2.30 | | Full Year Cash Provided by Operating Activities | | At least $320 | Consolidated Financial Statements (Unaudited) Unaudited Q1 2024 consolidated financial statements show $1.486 billion revenue, $43 million net income, $6.52 billion total assets, and $2 million net cash from operations Consolidated Statements of Operations Q1 2024 consolidated statements of operations show net revenue of $1.486 billion, gross profit of $400 million, and net income of $43 million, or $0.29 per diluted share Consolidated Statements of Operations Summary | (in millions) | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net revenue | $1,486 | $1,549 | | Gross profit | $400 | $418 | | Income from operations | $128 | $138 | | Net income | $43 | $57 | | Diluted EPS | $0.29 | $0.38 | Consolidated Balance Sheets As of March 30, 2024, Resideo's balance sheet reported total assets of $6.52 billion, total liabilities of $3.751 billion, and total stockholders' equity of $2.769 billion Consolidated Balance Sheets Summary | (in millions) | March 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $603 | $636 | | Total current assets | $2,677 | $2,743 | | Total assets | $6,520 | $6,645 | | Liabilities & Equity | | | | Total current liabilities | $1,385 | $1,525 | | Long-term debt | $1,394 | $1,396 | | Total liabilities | $3,751 | $3,896 | | Total stockholders' equity | $2,769 | $2,749 | Consolidated Statements of Cash Flows Q1 2024 cash flow statements show $2 million net cash from operating activities, $22 million used in investing, $8 million used in financing, ending with $604 million cash Consolidated Statements of Cash Flows Summary | (in millions) | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $2 | ($4) | | Net cash used in investing activities | ($22) | ($26) | | Net cash used in financing activities | ($8) | ($9) | | Net decrease in cash | ($33) | ($33) | | Cash at end of period | $604 | $296 | Non-GAAP Financial Measures and Reconciliations Resideo provides GAAP to non-GAAP reconciliations, showing Q1 2024 GAAP Net Income of $43 million adjusted to $70 million, and company-wide Adjusted EBITDA of $137 million Non-GAAP Adjusted Net Income Reconciliation | (in millions) | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | GAAP Net income | $43 | $57 | | Non-GAAP Adjusted net income | $70 | $76 | | GAAP Net income per diluted share | $0.29 | $0.38 | | Non-GAAP Adjusted net income per diluted share | $0.47 | $0.51 | Non-GAAP Adjusted EBITDA Reconciliation | (in millions) | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | GAAP Net income | $43 | $57 | | Non-GAAP Adjusted EBITDA | $137 | $138 | | Non-GAAP Adjusted EBITDA as a % of net revenue | 9.2% | 8.9% |