Resideo Announces First Quarter 2024 Financial Results
Products and Solutions first quarter gross margin of 39.5%, fourth consecutive quarter of year-over-year improvement
First quarter net income of $43 million; Adjusted EBITDA of $137 million at the higher end of outlook range
Continued progress on business transformation with new product introductions and agreement to acquire Snap One, a leading provider of smart-living products and distribution
First Quarter 2024 Financial Highlights
- Net revenue of
$1.49 billion , down 4% compared to$1.55 billion in the first quarter 2023 - Net income of
$43 million compared to$57 million in the first quarter 2023 - Fully diluted EPS of
$0.29 and$0.38 and Adjusted EPS(1) of$0.47 and$0.51 for the first quarter 2024 and first quarter 2023, respectively. - Adjusted EBITDA(1) of
$137 million compared to$138 million in the first quarter 2023
Management Remarks
"Performance within Products and Solutions drove first quarter Adjusted EBITDA to the higher end of our outlook range," commented
"We continued to execute on our transformation work through organic and inorganic actions. We took further steps in optimizing our manufacturing footprint and we have improved structural costs through restructuring and focused expense controls. We expect our planned acquisition of Snap One will bring immediate value to
1 This press release includes certain "non-GAAP financial measures" as defined under the Securities Exchange Act of 1934.
Products and Solutions First Quarter 2024 Highlights
- Net revenue of
$620 million , decreased 6% compared to the first quarter 2023 - Gross margin of 39.5%, up 180 basis points compared to the first quarter 2023
- Income from operations of
$112 million compared to$105 million in the first quarter 2023 - Adjusted EBITDA of
$140 million , 22.6% of revenue, compared to$128 million , 19.5% of revenue, in the first quarter 2023
Products and Solutions delivered net revenue of
Gross margin for the quarter was 39.5%, compared to 37.7% in the first quarter 2023, reflecting improving material costs, reduced freight, and lower direct labor spending. Selling, general and administrative expenses were down
ADI Global Distribution First Quarter 2024
- Net revenue of
$866 million , decreased 3% compared to the first quarter 2023 - Gross margin of 18.0%, down 120 basis points compared to the first quarter 2023
- Income from operations of
$49 million compared to$64 million in the first quarter 2023 - Adjusted EBITDA of
$58 million , 6.7% of revenue, compared to$70 million , 7.9% of revenue, in the first quarter 2023 - Exclusive brand sales up 7% compared to prior year first quarter
ADI first quarter 2024 net revenue of
Gross margin for the quarter was 18.0%, down 120 basis points compared to first quarter of 2023. The reduction was driven by reduced inflationary pricing benefits that drove higher margin in 2023 and lower product line margin. ADI has experienced a reduction of average cost inventory benefits year-over-year, as supplier price increases have reduced in pace and scale in 2024. Selling, general and administrative expenses were
Cash Flow and Liquidity
Net cash provided by operating activities was
Outlook
The following table summarizes the Company's current second quarter 2024 and full year 2024 outlook.
($ in millions, except per share data) |
Q2 2024 |
2024 |
Net revenue |
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Non-GAAP Adjusted EBITDA |
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Non-GAAP Adjusted Earnings per share |
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Full Year Cash Provided by Operating Activities |
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At least |
Conference Call and Webcast Details
About
Contacts: |
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Investors: |
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Media: |
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Vice President, Investor Relations |
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Corporate Communications Manager |
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Forward-Looking Statements
This release contains "forward-looking statements." All statements, other than statements of fact, that address activities, events or developments that we or our management intend, expect, project, believe or anticipate will or may occur in the future are forward-looking statements. Although we believe forward-looking statements are based upon reasonable assumptions, such statements involve known and unknown risks and uncertainties, which may cause the actual results or performance of the Company to differ materially from such forward-looking statements. Such risks and uncertainties include, but are not limited to, (1) our ability to achieve our outlook regarding the second quarter 2024 and full year 2024, (2) our ability to recognize the expected savings from, and the timing and impact of, our existing and anticipated cost reduction actions, and our ability to optimize our portfolio and operational footprint (3), the amount of our obligations and nature of our contractual restrictions pursuant to, and disputes that have or may hereafter arise under the agreements we entered into with Honeywell in connection with our spin-off, (4) risks related to our recently completed acquisitions including our ability to achieve the targeted amount of annual cost synergies and successfully integrate the acquired operations (including successfully driving category growth in connected offerings), (5) the ability of the conditions to the closing of the Snap One transaction being timely satisfied and the consummation of the transaction, (6) the ability of Snap One and/or
Use of Non-GAAP Measures
This press release includes certain "non-GAAP financial measures" as defined under the Securities Exchange Act of 1934 and in accordance with Regulation G. Management believes the use of such non-GAAP financial measures assists investors in understanding the ongoing operating performance of the Company by presenting the financial results between periods on a more comparable basis. Such non-GAAP financial measures should not be construed as an alternative to reported results determined in accordance with
We have included reconciliations of these non-GAAP financial measures to the most directly comparable financial measures calculated and provided in accordance with
Table 1: SUMMARY OF FINANCIAL RESULTS (UNAUDITED)
|
Q1 2024 (1) |
||||||
(in millions) |
Products and Solutions |
|
ADI Global Distribution |
|
Corporate |
|
|
Net revenue |
$ 620 |
|
$ 866 |
|
$ — |
|
$ 1,486 |
Cost of goods sold |
375 |
|
710 |
|
1 |
|
1,086 |
Gross profit |
245 |
|
156 |
|
(1) |
|
400 |
Research and development expenses |
25 |
|
— |
|
— |
|
25 |
Selling, general and administrative expenses |
97 |
|
102 |
|
32 |
|
231 |
Intangible asset amortization |
6 |
|
3 |
|
— |
|
9 |
Restructuring expenses |
5 |
|
2 |
|
— |
|
7 |
Income (loss) from operations |
$ 112 |
|
$ 49 |
|
$ (33) |
|
$ 128 |
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Q1 2023 (1) |
||||||
(in millions) |
Products and Solutions |
|
ADI Global Distribution |
|
Corporate |
|
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Net revenue |
$ 658 |
|
$ 891 |
|
$ — |
|
$ 1,549 |
Cost of goods sold |
410 |
|
720 |
|
1 |
|
1,131 |
Gross profit |
248 |
|
171 |
|
(1) |
|
418 |
Research and development expenses |
25 |
|
— |
|
— |
|
25 |
Selling, general and administrative expenses |
110 |
|
104 |
|
30 |
|
244 |
Intangible asset amortization |
6 |
|
3 |
|
— |
|
9 |
Restructuring expenses |
2 |
|
— |
|
— |
|
2 |
Income (loss) from operations |
$ 105 |
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$ 64 |
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$ (31) |
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$ 138 |
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Year-Over-Year % Change |
||||||
|
Products and Solutions |
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ADI Global Distribution |
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Corporate |
|
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Net revenue |
(6) % |
|
(3) % |
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N/A |
|
(4) % |
Cost of goods sold |
(9) % |
|
(1) % |
|
— % |
|
(4) % |
Gross profit |
(1) % |
|
(9) % |
|
— % |
|
(4) % |
Research and development expenses |
— % |
|
N/A |
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N/A |
|
— % |
Selling, general and administrative expenses |
(12) % |
|
(2) % |
|
7 % |
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(5) % |
Intangible asset amortization |
— % |
|
— % |
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N/A |
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— % |
Restructuring expenses |
150 % |
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N/A |
|
N/A |
|
250 % |
Income (loss) from operations |
7 % |
|
(23) % |
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6 % |
|
(7) % |
|
|
(1) |
On |
Table 2: CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
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Three Months Ended |
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(in millions, except per share data) |
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|
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Net revenue |
$ 1,486 |
|
$ 1,549 |
Cost of goods sold |
1,086 |
|
1,131 |
Gross profit |
400 |
|
418 |
Operating expenses: |
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Research and development expenses |
25 |
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25 |
Selling, general and administrative expenses |
231 |
|
244 |
Intangible asset amortization |
9 |
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9 |
Restructuring expenses |
7 |
|
2 |
Total operating expenses |
272 |
|
280 |
Income from operations |
128 |
|
138 |
Reimbursement Agreement expense (1) |
43 |
|
41 |
Other income, net |
(1) |
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(1) |
Interest expense, net |
13 |
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17 |
Income before taxes |
73 |
|
81 |
Provision for income taxes |
30 |
|
24 |
Net income |
$ 43 |
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$ 57 |
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Earnings per share: |
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Basic |
$ 0.29 |
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$ 0.39 |
Diluted |
$ 0.29 |
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$ 0.38 |
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Weighted average number of shares outstanding: |
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Basic |
146 |
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147 |
Diluted |
148 |
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149 |
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(1) |
Represents the expense incurred pursuant to the Reimbursement Agreement, which has an annual cash payment cap of |
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Three Months Ended |
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(in millions) |
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Accrual for Reimbursement Agreement liabilities |
$ 43 |
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$ 41 |
Cash payments made to Honeywell |
(35) |
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(35) |
Accrual increase, non-cash component in period |
$ 8 |
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$ 6 |
Table 3: CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in millions, except par value) |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
$ 603 |
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$ 636 |
Accounts receivable, net |
933 |
|
973 |
Inventories, net |
929 |
|
941 |
Other current assets |
212 |
|
193 |
Total current assets |
2,677 |
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2,743 |
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Property, plant and equipment, net |
369 |
|
390 |
|
2,689 |
|
2,705 |
Intangible assets, net |
456 |
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461 |
Other assets |
329 |
|
346 |
Total assets |
$ 6,520 |
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$ 6,645 |
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LIABILITIES AND STOCKHOLDERS' EQUITY |
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Current liabilities: |
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Accounts payable |
$ 858 |
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$ 905 |
Current portion of long-term debt |
12 |
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12 |
Accrued liabilities |
515 |
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608 |
Total current liabilities |
1,385 |
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1,525 |
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Long-term debt |
1,394 |
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1,396 |
Obligations payable under Indemnification Agreements |
617 |
|
609 |
Other liabilities |
355 |
|
366 |
Total liabilities |
3,751 |
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3,896 |
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Stockholders' equity |
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|
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Common stock, |
— |
|
— |
Additional paid-in capital |
2,243 |
|
2,226 |
Retained earnings |
853 |
|
810 |
Accumulated other comprehensive loss, net |
(226) |
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(194) |
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(101) |
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(93) |
Total stockholders' equity |
2,769 |
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2,749 |
Total liabilities and stockholders' equity |
$ 6,520 |
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$ 6,645 |
Table 4: CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
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Three Months Ended |
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(in millions) |
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Cash Flows From Operating Activities: |
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Net income |
$ 43 |
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$ 57 |
Adjustments to reconcile net income to net cash in operating activities: |
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Depreciation and amortization |
24 |
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24 |
Restructuring expenses |
7 |
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2 |
Stock-based compensation expense |
14 |
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12 |
Other, net |
3 |
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— |
Changes in assets and liabilities, net of acquired companies: |
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Accounts receivable, net |
34 |
|
23 |
Inventories, net |
7 |
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(27) |
Other current assets |
3 |
|
(8) |
Accounts payable |
(44) |
|
(12) |
Accrued liabilities |
(89) |
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(86) |
Other, net |
— |
|
11 |
Net cash provided by (used in) operating activities |
2 |
|
(4) |
Cash Flows From Investing Activities: |
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|
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Capital expenditures |
(21) |
|
(20) |
Acquisitions, net of cash acquired |
— |
|
(6) |
Other investing activities, net |
(1) |
|
— |
Net cash used in investing activities |
(22) |
|
(26) |
Cash Flows From Financing Activities: |
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|
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Common stock repurchases |
(1) |
|
— |
Repayments of long-term debt |
(3) |
|
(3) |
Other financing activities, net |
(4) |
|
(6) |
Net cash used in financing activities |
(8) |
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(9) |
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash |
(5) |
|
6 |
Net decrease in cash, cash equivalents and restricted cash |
(33) |
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(33) |
Cash, cash equivalents and restricted cash at beginning of period |
637 |
|
329 |
Cash, cash equivalents and restricted cash at end of period |
$ 604 |
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$ 296 |
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS ADJUSTED NET INCOME PER DILUTED COMMON SHARE AND NET INCOME COMPARISON (Unaudited) |
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Three Months Ended |
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(in millions, except per share data) |
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GAAP Net income applicable to common shares |
$ 43 |
|
$ 57 |
Stock-based compensation expense |
14 |
|
12 |
Intangible asset amortization |
9 |
|
9 |
Reimbursement Agreement accrual increase, non-cash component (1) |
8 |
|
6 |
Restructuring expenses |
7 |
|
2 |
Loss on sale of assets |
3 |
|
— |
Net periodic benefit cost, excluding service costs |
— |
|
3 |
Other ( 2 ) |
(5) |
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(7) |
Tax effect of applicable non-GAAP adjustments (3) |
(9) |
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(6) |
Non-GAAP Adjusted net income applicable to common shares |
$ 70 |
|
$ 76 |
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Three Months Ended |
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|
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GAAP Net income per diluted common share |
$ 0.29 |
|
$ 0.38 |
Stock-based compensation expense |
0.09 |
|
0.08 |
Intangible asset amortization |
0.06 |
|
0.06 |
Reimbursement Agreement accrual increase, non-cash component (1) |
0.05 |
|
0.04 |
Restructuring expenses |
0.05 |
|
0.01 |
Loss on sale of assets |
0.02 |
|
— |
Net periodic benefit cost, excluding service costs |
— |
|
0.02 |
Other ( 2 ) |
(0.03) |
|
(0.04) |
Tax effect of applicable non-GAAP adjustments (3) |
(0.06) |
|
(0.04) |
Non-GAAP Adjusted net income per diluted common share |
$ 0.47 |
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$ 0.51 |
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|
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(1) |
Refer to the Unaudited Consolidated Statements of Operations herein. |
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(2) |
Other includes Tax Matters Agreement gain and foreign exchange transaction loss (income). |
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(3) |
We calculated the tax effect of non-GAAP adjustments by applying a flat statutory tax rate of 25% for the three months ended |
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS (Unaudited) |
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|||
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Three Months Ended |
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(in millions) |
|
|
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Net revenue |
$ 1,486 |
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$ 1,549 |
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|
|
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GAAP Net income applicable to common shares |
$ 43 |
|
$ 57 |
Provision for income taxes |
30 |
|
24 |
GAAP Income before taxes |
73 |
|
81 |
Depreciation and amortization |
24 |
|
24 |
Stock-based compensation expense |
14 |
|
12 |
Interest expense, net |
13 |
|
17 |
Reimbursement Agreement accrual increase, non-cash component (1) |
8 |
|
6 |
Restructuring expenses |
7 |
|
2 |
Loss on sale of assets |
3 |
|
— |
Net periodic benefit cost, excluding service costs |
— |
|
3 |
Other ( 2 ) |
(5) |
|
(7) |
Non-GAAP Adjusted EBITDA |
$ 137 |
|
$ 138 |
Non-GAAP Adjusted EBITDA as a % of net revenue |
9.2 % |
|
8.9 % |
|
|
(1) |
Refer to the Unaudited Consolidated Statements of Operations herein. |
|
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(2) |
Other includes Tax Matters Agreement gain and foreign exchange transaction loss (income). |
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS (Unaudited) |
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PRODUCTS AND SOLUTIONS SEGMENT |
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Three Months Ended |
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(in millions) |
|
|
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Net revenue |
$ 620 |
|
$ 658 |
|
|
|
|
GAAP Income from operations |
$ 112 |
|
$ 105 |
Stock-based compensation expense |
6 |
|
4 |
Restructuring expenses |
5 |
|
2 |
Non-GAAP Adjusted Income from Operations |
$ 123 |
|
$ 111 |
|
|
|
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Depreciation and amortization |
17 |
|
17 |
Non-GAAP Adjusted EBITDA |
$ 140 |
|
$ 128 |
Non-GAAP Adjusted EBITDA as a % of net revenue |
22.6 % |
|
19.5 % |
ADI GLOBAL DISTRIBUTION SEGMENT |
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Three Months Ended |
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(in millions) |
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Net revenue |
$ 866 |
|
$ 891 |
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GAAP Income from operations |
$ 49 |
|
$ 64 |
Stock-based compensation expense |
2 |
|
2 |
Restructuring expenses |
2 |
|
— |
Non-GAAP Adjusted Income from Operations |
$ 53 |
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$ 66 |
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Depreciation and amortization |
5 |
|
4 |
Non-GAAP Adjusted EBITDA |
$ 58 |
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$ 70 |
Non-GAAP Adjusted EBITDA as a % of net revenue |
6.7 % |
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7.9 % |
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