Resideo(REZI)2024-02-14 02:35Financial Data and Key Metrics Changes - Resideo reported Q4 2023 revenue of 147 million, a 50% increase compared to Q4 2022, and adjusted EBITDA was 263 million, an 89% increase compared to 440 million [37][16] Business Line Data and Key Metrics Changes - Products and Solutions (P&S) revenue for Q4 was 854 million, down 1% from the prior year, with gross margin at 18%, down from 19.1% in Q4 2022 [36] Market Data and Key Metrics Changes - The U.S. experienced a nearly 20% reduction in existing home sales in 2023, leading to the weakest housing turnover year since 1995, negatively impacting the residential security business [23] - Despite market headwinds, consolidated sales fell only 2% in 2023 due to strong product offerings and customer relationships [23] Company Strategy and Development Direction - The company is focused on reshaping its portfolio and operations, including the divestiture of Genesis and outsourcing manufacturing to position for long-term growth [13] - Resideo aims to drive growth in the new construction market and improve product innovation, with new product introductions planned for 2024 [14] - The company is enhancing its digital capabilities and expanding into adjacent markets, particularly in audiovisual [32] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about a more accommodating macro backdrop as 2024 progresses, despite current interest rate challenges and low housing turnover [55] - The initial 2024 outlook implies low single-digit sales growth at the midpoint, with expectations for higher adjusted EBITDA and non-GAAP EPS compared to 2023 [55] Other Important Information - The company repurchased 719,000 shares for 41 million for the full year [20] - The new agreement with ADT is expected to reduce security hardware sales by approximately $100 million in 2024 compared to 2023 [39] Q&A Session Summary Question: Clarification on order activity and revenue guidance for Q1 - Management acknowledged seasonality and expected lower security sales due to the ADT agreement and Genesis impact, indicating a ramp-up in sales as 2024 progresses [57] Question: Update on the relationship with ADT post-2025 - Management confirmed the end of the North American hardware business with ADT after 2025 but emphasized a strong foundation for continued collaboration [46] Question: Further room for price increases and product innovation pace - Management indicated limited price increase assumptions for 2024 and highlighted a focus on accelerating new product introductions across segments [50][51] Question: Long-term trajectory for P&S gross margins - Management discussed the potential for significant margin expansion as volumes recover and highlighted ongoing cost actions and portfolio optimization efforts [73][62]