Q3 2023 RESULTS
PRESENTATION
November 1, 2023
Disclaimer
Forward-Looking Statements
This presentation 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 fourth quarter 2023 and full year 2023, (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 disruption to our business and global economy caused by the lingering effects of COVID-19, (4) 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, (5) 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), (6) the Company's announced share repurchase program, the timing, purchase price and number of additional shares purchased under such program, if at all, the sources of funds under the repurchase program and the impacts of the repurchase program, and (7) the other risks described under the headings "Risk Factors" and "Cautionary Statement Concerning Forward-Looking Statements" in our Annual Report on Form 10-K for the year ended December 31, 2022 and other periodic filings we make from time to time with the Securities and Exchange Commission. Forward-looking statements are not guarantees of future performance, and actual results, developments, and business decisions may differ from those envisaged by our forward-looking statements. Except as required by law, we undertake no obligation to update such statements to reflect events or circumstances arising after the date of this presentation and we caution investors not to place undue reliance on any such forward looking statements.
Use of Non-GAAP Measures
This presentation and accompanying earnings material 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 U.S. GAAP.
The Company discloses a tabular comparison of Non-GAAP Adjusted Net Income, Non-GAAP Adjusted Net Income per diluted common share, Non-GAAP Adjusted EBITDA, and Non-GAAP Adjusted Income from Operations, each of which is a non-GAAP measure, because management believes that they are instrumental in comparing the results from period to period. Non-GAAP Adjusted Net Income, Non-GAAP Adjusted Net Income per diluted common share, Non-GAAP Adjusted EBITDA, and Non-GAAP Adjusted Income from Operations should not be considered in isolation or as a substitute for Net Income, Net Income per diluted common share or Income from operations, as applicable, as reported on the face of our consolidated statements of operations. We define Non-GAAP Adjusted Net Income and Non-GAAP Adjusted Net Income per diluted common share as Net Income and Net income per diluted common share, respectively, as set forth on the face of our consolidated statements of operations, adjusted for the following items: pension settlement loss, restructuring and impairment expenses; acquisition/divestiture related costs, divestiture loss, litigation settlement, net of insurance proceeds, Tax Matters Agreement gain, foreign exchange transaction loss (income), and tax effect of applicable non-GAAP adjustments. We define Non-GAAP Adjusted EBITDA as Net Income as set forth on the face of our consolidated statements of operations, adjusted for the following items: provision for income taxes; depreciation and amortization; interest expense, net; stock-based compensation expense, pension settlement loss, restructuring and impairment expenses; acquisition/divestiture related costs, divestiture loss, litigation settlement, net of insurance proceeds, and Tax Matters Agreement gain, and foreign exchange transaction loss (income). We define Non-GAAP Adjusted Income from Operations as Income from operations as set forth on the face of our consolidated statements of operations, adjusted for the following items: stock-based compensation expense, restructuring and impairment charges, and acquisition/divestiture related costs. We have included reconciliations of these non-GAAP financial measures to the most directly comparable financial measures calculated and provided in accordance with U.S. GAAP at the end of this presentation.
2 Resideo Confidential - © 2023 Resideo Technologies, Inc
Resideo Q3 2023 Highlights
- Financial results above midpoint of outlook range (excluding restructuring)
- Sharpened focus on portfolio optimization
- Driving further cost cutting initiatives to lower near-term and structural costs
- Continue to enhance digital experience at ADI, supporting touchless sales growth
- Repurchased 1.8M shares for $30M as part of $150M repurchase program
REVENUE | ADJUSTED EBITDA | CASH FROM OPERATIONS | ||||||
$1.55B for Q3 2023 | $138M for Q3 2023 | $60M for Q3 2023 | ||||||
-4% Y/Y | -14% Y/Y | +62% Y/Y | ||||||
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Products and Solutions Q3 2023 Highlights
- Sale of non-strategic Genesis Cable business and acquisition of Sfty, adding capabilities to European life safety services offerings
- Increased content per home in new construction channel
- Expanded partnerships with leading national insurance providers
- Lowes vendor of the year for electrical category
REVENUE | PRICE ACTION | GROSS MARGIN | ||||
$654M for Q3 2023 | REALIZATION | 38.7% for Q3 2023 | ||||
+$25M Y/Y | +250 bps Y/Y | |||||
-7% Y/Y | ||||||
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ADI Global Distribution Q3 2023 Highlights
- E-commercerevenue grew 5% y/y; continued enhancement of digital customer experience
- Opening of Dallas super center distribution hub providing capacity for growth, technology enhancements to support customer service, and improved supply chain efficiency
- Growth in access control and relatively flat performance across other key commercial categories offset by continued pressure in residential security
REVENUE | GROSS MARGIN | E-COMMERCE | ||||
$900M for Q3 2023 | 18.3% for Q3 2023 | SALES GROWTH | ||||
-1% Y/Y | -100 bps Y/Y | +5% Y/Y | ||||
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The Future of Living
Our 2nd Annual ESG Report, The Future of Living, demonstrates our continued commitment to helping protect what matters most and showcases our efforts and progress in the areas of:
- product sustainability
- environmental impact reductions
- development of our Company culture
- dedication to the communities we serve
- transparency and accountability
This report is a critical milestone within our multi- year ESG strategy as we continue our commitment to the well-being of people and the planet.
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Q3 2023 Financial Summary
($ in millions, except per share) | Q3 2023 | Q3 2022 | % change Y/Y |
Net Revenue | 1,554 | 1,618 | -4% |
P&S Revenue | 654 | 707 | -7% |
ADI Revenue | 900 | 911 | -1% |
Gross Margin | 26.8% | 26.6% | +20bps |
P&S Gross Margin | 38.7% | 36.2% | +250bps |
ADI Gross Margin | 18.3% | 19.3% | -100bps |
Operating Profit | 109 | 155 | -30% |
P&S Operating Profit | 107 | 124 | -14% |
ADI Operating Profit | 60 | 78 | -23% |
Corp. Operating Expense | (58) | (47) | +23% |
Adjusted EBITDA | 138 | 160 | -14% |
EPS - Diluted | 0.14 | 0.42 | -67% |
Non-GAAP EPS - Diluted | 0.41 | 0.48 | -15% |
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Resideo Key Financial Trends
Revenue | -4% | Operating Profit | -30% | ||
$M | Y/Y | $M | Y/Y | ||
$1,700 | $200 | ||||
$1,600 | |||||
$1,500 | $150 | ||||
$1,400 | |||||
$1,300 | $100 | ||||
$1,200 | |||||
$1,100 | $50 | ||||
Q3 21 Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 | |||||
Q3 21 Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 | |||||
Earnings Per Share | -67% | Operating Cash Flow | ||
Y/Y | $M | |||
$0.70 | $150 | |||
$0.60 | $100 | |||
$0.50 | ||||
$0.40 | $50 | |||
$0.30 | $0 | |||
$0.20 | ||||
($50) | ||||
$0.10 | ||||
$0.00 | ($100) | |||
Q3 21 Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 | Q3 21 Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 | |||
Q3 2023 HIGHLIGHTS
- Revenue slowed from softer end market demand across residential categories
- Progress on input cost reductions within Products and Solutions drove gross margin improvement
- Operating profit impacted by $38M of restructuring charge, lower Products and Solutions volumes, and reduced ADI gross margin
- Strong operating cash flow reflects improved working capital y/y
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Products and Solutions Financial Trends
P&S Revenue | -7% | P&S Gross Margin | +250 | |||||||||||||||||||
$M | Y/Y | bps | ||||||||||||||||||||
44% | ||||||||||||||||||||||
$800 | ||||||||||||||||||||||
40% | ||||||||||||||||||||||
$700 | ||||||||||||||||||||||
$600 | 36% | |||||||||||||||||||||
$500 | 32% | |||||||||||||||||||||
$400 | 28% | |||||||||||||||||||||
Q3 21 Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 | Q3 21 Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 | |||||||||||||||||||||
$M | P&S Operating Profit | -14% |
Y/Y | ||
$200 | ||
$150
$100
$50
$0
Q3 21 Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 Q3 23
Q3 2023 HIGHLIGHTS
- Revenue down 7% y/y driven by reduced Air and Energy product volumes, partially offset by price realization
- Gross margin up 250 bps reflecting progress reducing input costs, partially offset by lower volumes
- OPEX down $11M y/y, excluding restructuring, with cost savings initiatives more than offsetting inflation impacts
- Adjusted EBITDA up 5% y/y to $153M with Adjusted EBITDA margin expansion of 270 bps y/y
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ADI Global Distribution Financial Trends
ADI Revenue | -1% | ADI Gross Margin | -100 | ||
$M | Y/Y | bps | |||
$1,000 | 22% | ||||
$900 | 18% | ||||
$800 | |||||
$700 | 14% | ||||
$600 | 10% | ||||
Q3 21 Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 | Q3 21 Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 | ||||
ADI Operating Profit | -23% | |
Y/Y | ||
$M | ||
$90 $75 $60 $45 $30 $15
$0
Q3 21 Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 Q3 23
Q3 2023 HIGHLIGHTS
- Revenue down 1% y/y driven by declines in residential security category, offset by growth in access control
- E-commercesales up 5% y/y, reflecting continued progress on digital initiatives
- Gross margin down y/y due to reduced inflationary benefits and slowing demand environment
- Focus on cost controls with SG&A down $3M y/y and $10M in restructuring to drive further savings in 2024
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Resideo Technologies Inc. published this content on 01 November 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 01 November 2023 20:16:20 UTC.