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Resideo(REZI) - 2024 Q3 - Earnings Call Transcript
REZIResideo(REZI)2024-11-09 20:58
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Financial Data and Key Metrics Changes - Total company reported revenue for Q3 2024 was 1.83billion,up181.83 billion, up 18% year-over-year and up 4% on an organic basis [27] - Adjusted EBITDA was 190 million, up 29% compared to 147millioninQ32023[27]−Fullydilutedadjustedearningspersharewas147 million in Q3 2023 [27] - Fully diluted adjusted earnings per share was 0.58 compared to 0.55intheprioryear[27]−Totalcompanygrossmarginexpandedbyalmost200basispointsyear−over−year[8]BusinessLineDataandKeyMetricsChanges−ProductsandSolutionsrevenueforQ3was0.55 in the prior year [27] - Total company gross margin expanded by almost 200 basis points year-over-year [8] Business Line Data and Key Metrics Changes - Products and Solutions revenue for Q3 was 645 million, up 4% organically and down 1% on a reported basis [28] - ADI reported revenue of 1.18billion,withorganicrevenuegrowthof41.18 billion, with organic revenue growth of 4% [31] - Products and Solutions gross margin was 42.2%, up 350 basis points year-over-year [14] - ADI's adjusted EBITDA was 92 million, up 33% compared to Q3 last year [32] Market Data and Key Metrics Changes - Both Products and Solutions and ADI generated mid-single-digit year-over-year organic revenue growth [6] - Sales of First Alert safety products recorded a fourth consecutive quarter of double-digit revenue growth [12] - ADI e-commerce sales grew 18% year-over-year [21] Company Strategy and Development Direction - The integration of Snap One into ADI is progressing well, targeting 75millionofannualrunratesynergiesexiting2026[9]−Thecompanyisfocusedonintroducingaregularcadenceofnewproductstodrivefutureinnovation[9]−Thecompanyplanstocontinueexecutingagainstitsbusinessstrategytoensuremomentumforthenextleader[39]Management′sCommentsonOperatingEnvironmentandFutureOutlook−Managementnotedamixedglobalmacrobackdropwithpositiveindicatorslikeimprovinginterestratesandnewhomesales,butalsoheadwindssuchassoftnessinexistinghomesalesintheU.S.andweaknessintheEMEAmarket[7]−ThecompanyexpectstotalcompanynetrevenueforQ42024tobeintherangeof75 million of annual run rate synergies exiting 2026 [9] - The company is focused on introducing a regular cadence of new products to drive future innovation [9] - The company plans to continue executing against its business strategy to ensure momentum for the next leader [39] Management's Comments on Operating Environment and Future Outlook - Management noted a mixed global macro backdrop with positive indicators like improving interest rates and new home sales, but also headwinds such as softness in existing home sales in the U.S. and weakness in the EMEA market [7] - The company expects total company net revenue for Q4 2024 to be in the range of 1.815 billion to 1.855billion[34]−Managementexpressedconfidenceinthecompany′sfuturegrowthandprofitability[39]OtherImportantInformation−TheCEOannouncedintentionstoretirein2025,planningtoremainasasenioradviserforasmoothtransition[37]−ThecompanyachievedstrongcashflowgenerationwithQ3cashfromoperationsat1.855 billion [34] - Management expressed confidence in the company's future growth and profitability [39] Other Important Information - The CEO announced intentions to retire in 2025, planning to remain as a senior adviser for a smooth transition [37] - The company achieved strong cash flow generation with Q3 cash from operations at 147 million, a 145% increase year-over-year [33] Q&A Session Summary Question: Leadership Transition - Inquiry about the qualities needed in the next leader for Resideo and the company's current position for future growth [41] Response: Leadership Transition - Management emphasized the importance of continuing the company's momentum and focusing on growth and profitability [42][43] Question: ADI Performance - Questions regarding the strong performance of ADI, including sales growth and margin challenges [44] Response: ADI Performance - Management explained that growth was driven by large national accounts and investments in e-commerce, but competitive pricing pressures affected margins [45][46] Question: SG&A and OpEx - Inquiry about higher-than-expected SG&A expenses and future OpEx targets [50] Response: SG&A and OpEx - Management acknowledged unusual one-time expenses but expected SG&A to return to normal levels [51] Question: Future Margins - Questions about gross margin expectations for 2025 [52] Response: Future Margins - Management remained positive about future gross margin opportunities, particularly with new product introductions [52]