Resideo(US:REZI)2025-05-06 21:00Financial Data and Key Metrics Changes - Total net revenue for Q1 2025 was approximately $1,800,000,000, representing a 19% year-over-year growth [5] - Total gross margin increased to 28.9%, up 200 basis points year-over-year [6] - Adjusted EBITDA grew 23% year-over-year to $168,000,000 [6] - Adjusted earnings per share rose 34% year-over-year to $0.63 [6] Business Segment Data and Key Metrics Changes - Products and Solutions segment achieved 6% organic revenue growth year-over-year, with total revenue growth of 5% [14] - ADI segment reported 29% year-over-year growth in reported net revenue, with 4% organic net revenue growth despite two fewer selling days [22] - ADI's organic average daily sales grew 7% year-over-year [22] Market Data and Key Metrics Changes - Demand for new Honeywell Home Focus Pro thermostats and First Alert Vista H series security products remains strong [6] - Customer demand in Q1 was healthy across both business segments, with minimal signs of customer hesitancy or order cancellations [11] Company Strategy and Development Direction - The company is focused on mitigating tariff impacts through price increases and strategic inventory purchases [10][11] - Continued emphasis on new product introductions, with several scheduled for launch later in 2025 [20] - The integration of SnapOne is progressing well, with nearly 100 new products launched in the quarter [25][26] Management's Comments on Operating Environment and Future Outlook - Management maintains a cautious outlook on the macroeconomic environment but believes in the strength of execution to navigate uncertainties [32] - The company is reaffirming its 2025 full-year outlook, planning phased price increases to offset tariff costs [34][36] - Management expressed optimism about ongoing gross margin improvements driven by structural efficiencies and new product launches [70][71] Other Important Information - Approximately 90% of goods sold in the U.S. are produced in Mexico, with 98% being USMCA compliant and exempt from tariffs [9][18] - The company absorbed an immaterial amount of tariff-related expenses prior to USMCA tariff preference treatment [18] Q&A Session Summary Question: Pricing strategy in ADI and potential demand impact - Management indicated that they have taken a phased approach to pass through price increases from suppliers and do not expect material demand changes [40][42] Question: Customer buying behavior and demand in April - Management noted minimal buying ahead and strong demand continued into April, with no significant changes in customer behavior [56][58] Question: Overall spending cycle in residential and commercial markets - Management described the current housing market as somewhat depressed but noted healthy remodeling activity and recovery in new home sales [61][64] Question: Gross margin leverage when the macro environment improves - Management expressed optimism about structural improvements in gross margins, expecting ongoing growth without setting specific targets [70][71]