Resideo Announces Second Quarter 2024 Financial Results
Second quarter net income of
Products and Solutions second quarter gross margin of 41.3%, fifth consecutive quarter of year-over-year improvement
Continued progress on business transformation with forthcoming new product introductions and completed acquisition of
Appoints new Chief Financial Officer,
Second Quarter 2024 Financial Highlights
- Net revenue of
$1.59 billion , down 1% compared to$1.60 billion in the second quarter 2023 - Net income of
$30 million compared to$50 million in the second quarter 2023 - Adjusted EBITDA(1) of
$175 million compared to$155 million in the second quarter 2023 - Fully diluted EPS of
$0.19 and$0.34 and Adjusted EPS(1) of$0.62 and$0.48 for the second quarter 2024 and second quarter 2023, respectively.
Management Remarks
"Our second quarter results demonstrated the substantial progress we have made in transforming the structural profitability profile of the business and in executing on value creating strategic transactions," commented
"I want to welcome former Snap One CFO,
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(1) This press release includes certain "non-GAAP financial measures" as defined under the Securities Exchange Act of 1934. |
Products and Solutions Second Quarter 2024 Highlights
- Net revenue of
$630 million , decreased 7% compared to the second quarter 2023 - Gross margin of 41.3%, up 300 basis points compared to the second quarter 2023
- Income from operations of
$130 million compared to$115 million in the second quarter 2023 - Adjusted EBITDA of
$156 million , 24.8% of revenue, compared to$137 million , 20.2% of revenue, in the second quarter 2023
Products and Solutions delivered net revenue of
Gross margin for the quarter was 41.3%, compared to 38.3% in the second quarter 2023, reflecting improving material costs, lower direct labor spending and more favorable factory utilization. Selling, general and administrative expenses were down
ADI Global Distribution Second Quarter 2024 Highlights
- Net revenue of
$959 million , increased 4% compared to the second quarter 2023 - Gross margin of 19.4%, up 20 basis points compared to the second quarter 2023
- Income from operations of
$62 million compared to$71 million in the second quarter 2023 - Adjusted EBITDA of
$77 million , 8.1% of revenue, compared to$79 million , 8.6% of revenue, in the second quarter 2023 - Exclusive brand sales up 18% compared to prior year second quarter, not including
Snap One
ADI second quarter 2024 net revenue of
Gross margin for the quarter was 19.4%, up 20 basis points compared to second quarter of 2023. The increase was driven by the inclusion of higher margin
Cash Flow and Liquidity
Net cash provided by operating activities was
Outlook
The following table summarizes the Company's current third quarter 2024 and full year 2024 outlook.
($ in millions, except per share data) |
Q3 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 third 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
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)
|
Q2 2024 (1) |
|
YTD 2024 (1) |
||||||||||||
(in millions) |
Products |
|
ADI Global |
|
Corporate |
|
Total |
|
Products |
|
ADI Global |
|
Corporate |
|
Total |
Net revenue |
$ 630 |
|
$ 959 |
|
$ — |
|
$ 1,589 |
|
$ 1,250 |
|
$ 1,825 |
|
$ — |
|
$ 3,075 |
Cost of goods sold |
370 |
|
773 |
|
(1) |
|
1,142 |
|
745 |
|
1,483 |
|
— |
|
2,228 |
Gross profit |
260 |
|
186 |
|
1 |
|
447 |
|
505 |
|
342 |
|
— |
|
847 |
Research and development expenses |
21 |
|
— |
|
— |
|
21 |
|
46 |
|
— |
|
— |
|
46 |
Selling, general and administrative |
103 |
|
118 |
|
59 |
|
280 |
|
200 |
|
220 |
|
91 |
|
511 |
Intangible asset amortization |
6 |
|
6 |
|
1 |
|
13 |
|
12 |
|
9 |
|
1 |
|
22 |
Restructuring, impairment and |
— |
|
— |
|
11 |
|
11 |
|
5 |
|
2 |
|
11 |
|
18 |
Income (loss) from operations |
$ 130 |
|
$ 62 |
|
$ (70) |
|
$ 122 |
|
$ 242 |
|
$ 111 |
|
$ (103) |
|
$ 250 |
|
Q2 2023 (1) |
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YTD 2023 (1) |
||||||||||||
(in millions) |
Products |
|
ADI Global |
|
Corporate |
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Total |
|
Products |
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ADI Global |
|
Corporate |
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Total |
Net revenue |
$ 677 |
|
$ 925 |
|
$ — |
|
$ 1,602 |
|
$ 1,335 |
|
$ 1,816 |
|
$ — |
|
$ 3,151 |
Cost of goods sold |
418 |
|
747 |
|
1 |
|
1,166 |
|
826 |
|
1,467 |
|
2 |
|
2,295 |
Gross profit (loss) |
259 |
|
178 |
|
(1) |
|
436 |
|
509 |
|
349 |
|
(2) |
|
856 |
Research and development expenses |
28 |
|
— |
|
1 |
|
29 |
|
55 |
|
— |
|
1 |
|
56 |
Selling, general and administrative |
111 |
|
102 |
|
30 |
|
242 |
|
221 |
|
207 |
|
58 |
|
486 |
Intangible asset amortization |
5 |
|
3 |
|
1 |
|
10 |
|
11 |
|
6 |
|
2 |
|
19 |
Restructuring and impairment |
— |
|
2 |
|
— |
|
2 |
|
2 |
|
2 |
|
— |
|
4 |
Income (loss) from operations |
$ 115 |
|
$ 71 |
|
$ (33) |
|
$ 153 |
|
$ 220 |
|
$ 135 |
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$ (64) |
|
$ 291 |
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Q2 2024 % change compared with |
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YTD 2024 % change compared with |
||||||||||||
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Products |
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ADI Global |
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Corporate |
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Total |
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Products |
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ADI Global |
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Corporate |
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Total |
Net revenue |
(7) % |
|
4 % |
|
N/A |
|
(1) % |
|
(6) % |
|
— % |
|
N/A |
|
(2) % |
Cost of goods sold |
(11) % |
|
3 % |
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N/A |
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(2) % |
|
(10) % |
|
1 % |
|
N/A |
|
(3) % |
Gross profit |
— % |
|
4 % |
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N/A |
|
3 % |
|
(1) % |
|
(2) % |
|
N/A |
|
(1) % |
Research and development expenses |
(25) % |
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N/A |
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N/A |
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(28) % |
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(16) % |
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N/A |
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N/A |
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(18) % |
Selling, general and administrative |
(7) % |
|
16 % |
|
97 % |
|
16 % |
|
(10) % |
|
6 % |
|
57 % |
|
5 % |
Intangible asset amortization |
20 % |
|
100 % |
|
— % |
|
30 % |
|
9 % |
|
50 % |
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(50) % |
|
16 % |
Restructuring, impairment and |
N/A |
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N/A |
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N/A |
|
450 % |
|
150 % |
|
— % |
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N/A |
|
350 % |
Income (loss) from operations |
13 % |
|
(13) % |
|
112 % |
|
(20) % |
|
10 % |
|
(18) % |
|
61 % |
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(14) % |
(1) |
On |
Table 2: CO NSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
|
Three Months Ended |
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Six Months Ended |
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(in millions, except per share data) |
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Net revenue |
$ 1,589 |
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$ 1,602 |
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$ 3,075 |
|
$ 3,151 |
Cost of goods sold |
1,142 |
|
1,166 |
|
2,228 |
|
2,295 |
Gross profit |
447 |
|
436 |
|
847 |
|
856 |
Operating expenses: |
|
|
|
|
|
|
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Research and development expenses |
21 |
|
29 |
|
46 |
|
56 |
Selling, general and administrative expenses |
280 |
|
242 |
|
511 |
|
486 |
Intangible asset amortization |
13 |
|
10 |
|
22 |
|
19 |
Restructuring, impairment and extinguishment costs, net |
11 |
|
2 |
|
18 |
|
4 |
Total operating expenses |
325 |
|
283 |
|
597 |
|
565 |
Income from operations |
122 |
|
153 |
|
250 |
|
291 |
Reimbursement Agreement expense (1) |
47 |
|
44 |
|
90 |
|
85 |
Other expense (income), net |
1 |
|
(2) |
|
— |
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(3) |
Interest expense, net |
15 |
|
17 |
|
28 |
|
34 |
Income before taxes |
59 |
|
94 |
|
132 |
|
175 |
Provision for income taxes |
29 |
|
44 |
|
59 |
|
68 |
Net income |
$ 30 |
|
$ 50 |
|
$ 73 |
|
$ 107 |
|
|
|
|
|
|
|
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Earnings per common share: |
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|
|
|
|
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Basic |
$ 0.19 |
|
$ 0.34 |
|
$ 0.49 |
|
$ 0.73 |
Diluted |
$ 0.19 |
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$ 0.34 |
|
$ 0.48 |
|
$ 0.72 |
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|
|
|
|
|
|
|
Weighted average common shares outstanding: |
|
|
|
|
|
|
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Basic |
146 |
|
147 |
|
146 |
|
147 |
Diluted |
149 |
|
149 |
|
148 |
|
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 |
|
Six Months Ended |
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(in millions) |
|
|
|
|
|
|
|
Accrual for Reimbursement Agreement liabilities deemed |
$ 47 |
|
$ 44 |
|
$ 90 |
|
$ 85 |
Cash payments made to Honeywell |
(35) |
|
(35) |
|
(70) |
|
(70) |
Accrual increase, non-cash component in period |
$ 12 |
|
$ 9 |
|
$ 20 |
|
$ 15 |
Table 3: CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in millions, except par value) |
|
|
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ASSETS |
|
|
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Current assets: |
|
|
|
Cash and cash equivalents |
$ 413 |
|
$ 636 |
Accounts receivable, net |
1,071 |
|
973 |
Inventories, net |
1,188 |
|
941 |
Other current assets |
212 |
|
193 |
Total current assets |
2,884 |
|
2,743 |
|
|
|
|
Property, plant and equipment, net |
424 |
|
390 |
|
3,079 |
|
2,705 |
Intangible assets, net |
1,218 |
|
461 |
Other assets |
379 |
|
346 |
Total assets |
$ 7,984 |
|
$ 6,645 |
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ 980 |
|
$ 905 |
Current portion of long-term debt |
12 |
|
12 |
Accrued liabilities |
602 |
|
608 |
Total current liabilities |
1,594 |
|
1,525 |
|
|
|
|
Long-term debt |
1,979 |
|
1,396 |
Obligations payable under Indemnification Agreements |
625 |
|
609 |
Other liabilities |
492 |
|
366 |
Total liabilities |
4,690 |
|
3,896 |
|
|
|
|
Stockholders' equity |
|
|
|
Preferred stock, |
482 |
|
— |
Common stock, |
— |
|
— |
Additional paid-in capital |
2,276 |
|
2,226 |
Retained earnings |
881 |
|
810 |
Accumulated other comprehensive loss, net |
(242) |
|
(194) |
|
(103) |
|
(93) |
Total stockholders' equity |
3,294 |
|
2,749 |
Total liabilities and stockholders' equity |
$ 7,984 |
|
$ 6,645 |
Table 4: CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
|
Three Months Ended |
|
Six Months Ended |
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(in millions) |
|
|
|
|
|
|
|
Cash Flows From Operating Activities: |
|
|
|
|
|
|
|
Net income |
$ 30 |
|
$ 50 |
|
$ 73 |
|
$ 107 |
Adjustments to reconcile net income to net cash in |
|
|
|
|
|
|
|
Depreciation and amortization |
28 |
|
25 |
|
52 |
|
49 |
Stock-based compensation expense |
15 |
|
13 |
|
29 |
|
25 |
Other, net |
7 |
|
4 |
|
17 |
|
6 |
Changes in assets and liabilities, net of acquired |
|
|
|
|
|
|
|
Accounts receivable, net |
(91) |
|
(58) |
|
(57) |
|
(35) |
Inventories, net |
(11) |
|
12 |
|
(4) |
|
(15) |
Other current assets |
6 |
|
11 |
|
9 |
|
3 |
Accounts payable |
75 |
|
56 |
|
31 |
|
44 |
Accrued liabilities |
11 |
|
(8) |
|
(78) |
|
(94) |
Other liabilities |
22 |
|
16 |
|
22 |
|
27 |
Net cash provided by operating activities |
92 |
|
121 |
|
94 |
|
117 |
Cash Flows From Investing Activities: |
|
|
|
|
|
|
|
Acquisitions, net of cash acquired |
(1,334) |
|
— |
|
(1,334) |
|
(6) |
Capital expenditures |
(15) |
|
(29) |
|
(36) |
|
(49) |
Other investing activities, net |
7 |
|
— |
|
6 |
|
— |
Net cash used in investing activities |
(1,342) |
|
(29) |
|
(1,364) |
|
(55) |
Cash Flows From Financing Activities: |
|
|
|
|
|
|
|
Proceeds from issuance of incremental term loans |
582 |
|
— |
|
582 |
|
— |
Proceeds from issuance of preferred stock, net of |
482 |
|
— |
|
482 |
|
— |
Repayments of long-term debt |
(3) |
|
(3) |
|
(6) |
|
(6) |
Other financing activities, net |
(1) |
|
(6) |
|
(6) |
|
(12) |
Net cash provided by (used in) financing activities |
1,060 |
|
(9) |
|
1,052 |
|
(18) |
Effect of foreign exchange rate changes on cash, cash |
— |
|
4 |
|
(5) |
|
10 |
Net (decrease) increase in cash, cash equivalents and |
(190) |
|
87 |
|
(223) |
|
54 |
Cash, cash equivalents and restricted cash at beginning |
604 |
|
296 |
|
637 |
|
329 |
Cash, cash equivalents and restricted cash at end of |
$ 414 |
|
$ 383 |
|
$ 414 |
|
$ 383 |
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS ADJUSTED NET INCOME PER DILUTED COMMON SHARE AND NET INCOME COMPARISON
(Unaudited)
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|||||||
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|||||||
|
Three Months Ended |
|
Six Months Ended |
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(in millions, except per share data) |
|
|
|
|
|
|
|
GAAP Net income |
$ 30 |
|
$ 50 |
|
$ 73 |
|
$ 107 |
Less: preferred stock dividends |
2 |
|
— |
|
2 |
|
— |
GAAP Net income available to common stockholders |
28 |
|
50 |
|
71 |
|
107 |
Acquisition and integration costs |
34 |
|
— |
|
34 |
|
— |
Stock-based compensation expense |
15 |
|
13 |
|
29 |
|
25 |
Intangible asset amortization |
13 |
|
10 |
|
22 |
|
19 |
Reimbursement Agreement accrual increase, non-cash |
12 |
|
9 |
|
20 |
|
15 |
Other (2) |
12 |
|
(3) |
|
17 |
|
(5) |
Tax effect of applicable non-GAAP adjustments (3) |
(22) |
|
(7) |
|
(31) |
|
(14) |
Non-GAAP Adjusted net income available to common |
$ 92 |
|
$ 72 |
|
$ 162 |
|
$ 147 |
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|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
||||
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|
|
|
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GAAP Net income per diluted common share |
$ 0.19 |
|
$ 0.34 |
|
$ 0.48 |
|
$ 0.72 |
Acquisition and integration costs |
0.23 |
|
— |
|
0.23 |
|
— |
Stock-based compensation expense |
0.10 |
|
0.09 |
|
0.20 |
|
0.17 |
Intangible asset amortization |
0.09 |
|
0.06 |
|
0.15 |
|
0.13 |
Reimbursement Agreement accrual increase, non-cash |
0.08 |
|
0.06 |
|
0.14 |
|
0.10 |
Other (2) |
0.08 |
|
(0.02) |
|
0.11 |
|
(0.03) |
Tax effect of applicable non-GAAP adjustments (3) |
(0.15) |
|
(0.05) |
|
(0.22) |
|
(0.10) |
Non-GAAP Adjusted net income per diluted common |
$ 0.62 |
|
$ 0.48 |
|
$ 1.09 |
|
$ 0.99 |
|
|
|
|
|
|
|
|
(1) |
Refer to the Unaudited Consolidated Statements of Operations herein. |
(2) |
Other includes restructuring expenses, impairment charges, extinguishment costs, loss on sale of assets, Tax Matters Agreement gain, foreign exchange transaction loss (income), and litigation settlements. |
(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)
|
|||||||
|
|||||||
|
Three Months Ended |
|
Six Months Ended |
||||
(in millions) |
|
|
|
|
|
|
|
Net revenue |
$ 1,589 |
|
$ 1,602 |
|
$ 3,075 |
|
$ 3,151 |
|
|
|
|
|
|
|
|
GAAP Net income |
$ 30 |
|
$ 50 |
|
$ 73 |
|
$ 107 |
GAAP Net income as a % of net revenue |
1.9 % |
|
3.1 % |
|
2.4 % |
|
3.4 % |
Provision for income taxes |
29 |
|
44 |
|
59 |
|
68 |
GAAP Income before taxes |
59 |
|
94 |
|
132 |
|
175 |
Acquisition and integration costs |
34 |
|
— |
|
34 |
|
— |
Depreciation and amortization |
28 |
|
25 |
|
52 |
|
49 |
Stock-based compensation expense |
15 |
|
13 |
|
29 |
|
25 |
Interest expense, net |
15 |
|
17 |
|
28 |
|
34 |
Reimbursement Agreement accrual increase, non-cash |
12 |
|
9 |
|
20 |
|
15 |
Other (2) |
12 |
|
(3) |
|
17 |
|
(5) |
Non-GAAP Adjusted EBITDA |
$ 175 |
|
$ 155 |
|
$ 312 |
|
$ 293 |
Non-GAAP Adjusted EBITDA as a % of net revenue |
11.0 % |
|
9.7 % |
|
10.1 % |
|
9.3 % |
(1) |
Refer to the Unaudited Consolidated Statements of Operations herein. |
(2) |
Other includes restructuring expenses, impairment charges, extinguishment costs, loss on sale of assets, Tax Matters Agreement gain, foreign exchange transaction loss (income), and litigation settlements. |
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS
(Unaudited) PRODUCTS AND SOLUTIONS SEGMENT |
|||||||
|
|||||||
|
Three Months Ended |
|
Six Months Ended |
||||
(in millions) |
|
|
|
|
|
|
|
Net revenue |
$ 630 |
|
$ 677 |
|
$ 1,250 |
|
$ 1,335 |
|
|
|
|
|
|
|
|
GAAP Income from operations |
$ 130 |
|
$ 115 |
|
$ 242 |
|
$ 220 |
GAAP Income from operations as a % of net revenue |
20.6 % |
|
17.0 % |
|
19.4 % |
|
16.5 % |
Stock-based compensation expense |
4 |
|
5 |
|
10 |
|
9 |
Other (1) |
4 |
|
— |
|
9 |
|
2 |
Non-GAAP Adjusted Income from Operations |
$ 138 |
|
$ 120 |
|
$ 261 |
|
$ 231 |
|
|
|
|
|
|
|
|
Depreciation and amortization |
18 |
|
17 |
|
35 |
|
34 |
Non-GAAP Adjusted EBITDA |
$ 156 |
|
$ 137 |
|
$ 296 |
|
$ 265 |
Non-GAAP Adjusted EBITDA as a % of net revenue |
24.8 % |
|
20.2 % |
|
23.7 % |
|
19.9 % |
(1) Other includes restructuring expenses and litigation settlements. |
ADI GLOBAL DISTRIBUTION SEGMENT |
|||||||
|
|||||||
|
Three Months Ended |
|
Six Months Ended |
||||
(in millions) |
|
|
|
|
|
|
|
Net revenue |
$ 959 |
|
$ 925 |
|
$ 1,825 |
|
$ 1,816 |
|
|
|
|
|
|
|
|
GAAP Income from operations |
$ 62 |
|
$ 71 |
|
$ 111 |
|
$ 135 |
GAAP Income from operations as a % of net revenue |
6.5 % |
|
7.7 % |
|
6.1 % |
|
7.4 % |
Stock-based compensation expense |
3 |
|
1 |
|
5 |
|
3 |
Acquisition and integration costs |
4 |
|
— |
|
4 |
|
— |
Other (1) |
— |
|
2 |
|
2 |
|
2 |
Non-GAAP Adjusted Income from Operations |
$ 69 |
|
$ 74 |
|
$ 122 |
|
$ 140 |
|
|
|
|
|
|
|
|
Depreciation and amortization |
8 |
|
5 |
|
13 |
|
9 |
Non-GAAP Adjusted EBITDA |
$ 77 |
|
$ 79 |
|
$ 135 |
|
$ 149 |
Non-GAAP Adjusted EBITDA as a % of net revenue |
8.0 % |
|
8.5 % |
|
7.4 % |
|
8.2 % |
(1) Other includes restructuring expenses. |
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