SCOTTSDALE, Ariz., May 3, 2022
/PRNewswire/ -- Resideo Technologies, Inc. (NYSE: REZI), a leading
global provider of home comfort and security solutions and
distributor of commercial and residential security and audio-visual
products, today announced financial results for the first quarter
ended April 2, 2022.
First Quarter 2022 Highlights
- Net revenue of $1.51 billion, up
6% from $1.42 billion in the first
quarter 2021
- Gross profit margin of 28.8%, up 290 basis points compared to
gross profit margin of 25.9% in the prior year comparable
period
- Operating profit of $172 million,
or 11.4% of revenue, compared to $130
million, or 9.2% of revenue, in the first quarter 2021
- Fully diluted earnings per share of $0.58 compared to fully diluted earnings per
share of $0.33 in the first quarter
2021
- Completed First Alert and Arrow Wire & Cable
acquisitions
Management Remarks
"We began 2022 on a strong note with both ADI and Products &
Solutions delivering year-over-year sales and profitability
expansion," commented Jay
Geldmacher, Resideo's President and CEO. "Overall demand
indicators remain positive across the business as residential and
commercial customers invest to improve the security, energy
efficiency and comfort of their surroundings."
"At ADI we continue to expand digital initiatives to support
improved customer experience and invest in tools to drive sales
force effectiveness, while also focusing on capturing value from
the current pricing environment. Products & Solutions is
delivering strong realization on 2021 price actions and demand
continues to outstrip our ability to fully supply. We closed the
acquisitions of First Alert and Arrow Wire & Cable and we are
excited to welcome the respective teams to Resideo. We are hitting
the ground running on unlocking the meaningful value creation
opportunity we see from bringing these organizations together with
Products & Solutions and ADI."
Products & Solutions First Quarter 2022
Highlights
- Revenue of $619 million, up 2%
compared to the first quarter 2021
- Operating profit of $153 million,
up 18% compared to the first quarter 2021
- Completed acquisition of First Alert on March 31, adding highly complementary smoke and
carbon monoxide detection home safety products
Products & Solutions delivered revenue of $619 million in the first quarter 2022, up 2%
compared to first quarter 2021. Strong flow through of price
adjustments put in place throughout 2021 drove the year-over-year
revenue expansion. Demand remains healthy in our air and energy
product categories across channels, which offset softness in
security products. The supply chain environment remained
challenging during the first quarter. This included both materials
sourcing, particularly related to semiconductor components, and
shipping costs, which remained at historically elevated levels.
Products & Solutions continues to make progress deepening its
relationships with key customers and partners and is actively
expanding efforts within attractive growth categories. This
includes initiatives targeting residential new construction,
multi-family, hydrogen and energy management.
Gross margin for the quarter was 42.8%, compared to 38.0% in
first quarter 2021. Pricing activity and annual inventory
revaluation benefited first quarter gross margin and helped offset
year-over-year material input cost inflation. Operating profit for
the quarter was $153 million, or
24.7% of revenue, up 18% compared to first quarter 2021 and
representing a 320 basis point expansion in operating margin.
The acquisition of First Alert, a leader in the residential
smoke alarm and carbon monoxide detection markets, closed on
March 31, 2022. First Alert expands
Resideo's sensors within the home and occupies a highly strategic
position on the ceiling. Efforts are already underway to leverage
the significant strategic opportunity from a channel perspective
and in exploring potential from more tightly integrating First
Alert's offerings with existing products. This includes the
opportunity to drive category growth in connected offerings.
ADI Global Distribution First Quarter 2022 Highlights
- Revenue of $887 million, up 9%
compared to the first quarter 2021
- Operating profit of $80 million,
up 36% compared to the first quarter 2021
- E-commerce sales growth of 24%, accounting for 17% of ADI total
sales
- Expanded data communications offering with acquisition of Arrow
Wire & Cable
ADI first quarter 2022 revenue of $887
million was up 9% compared to the first quarter 2021. Growth
was driven by volume expansion, recent acquisitions and a strong
pricing environment. Demand was strongest in categories that
typically serve commercial end markets including fire and access
control. Vendor supply issues remained a headwind to growth,
particularly in the video surveillance category. Sales through
ADI's e-commerce channel grew 24%, representing 17% of total ADI
sales, and private brands sales grew over 40% compared to first
quarter 2021.
Gross margin of 19.2% in the first quarter 2022 was up 200 basis
points compared to first quarter 2021. This expansion was driven by
ADI capturing the benefits of the current inflationary pricing
environment, progress on ADI specific price optimization efforts
and expansion of private brands. ADI is continuing to invest in and
roll out tools to enable its sales team to better understand and
serve customers, which has had significant benefit on sales
efficiency. Operating profit of $80
million for first quarter 2022 was up 36% from $59 million in first quarter 2021, reaching 9% of
revenue.
During the first quarter ADI saw significant growth in key
adjacent categories of professional and residential audio visual
and in data communications. In the first quarter, ADI completed the
acquisition of Arrow Wire & Cable, a U.S. west coast
distributor of data communications products. The acquisition
complements the 2021 acquisition of Norfolk Wire & Electronics
geographically, strengthening ADI's position in a key strategic
growth category. Arrow is the fourth acquisition for ADI since
2020.
First Quarter 2022 Performance
Consolidated revenue of $1.51
billion in the first quarter 2022 grew 6% compared with the
prior year of $1.42 billion. Gross
profit margin for the first quarter 2022 was 28.8%, up 290 basis
points compared to 25.9% in the prior year. Resideo's
operating profit of $172 million in
the first quarter 2022 compared to a prior year operating profit of
$130 million. Total Corporate costs
were $61 million, up from
$59 million in the prior year
primarily due to $10 million of
one-time transaction costs associated with the First Alert
acquisition. Net income for the first quarter 2022 was $87 million, or $0.58 per diluted common share, compared with
$49 million, or $0.33 per diluted common share, in the prior
year.
Cash Flow and Liquidity
First quarter 2022 net cash used by operating activities of
$59 million compared to cash provided
by operating activities of $5 million
in the prior year comparable period. The use of cash was primarily
due to typical seasonal timing of cash payments for bonus and
customer rebate payments accrued in prior periods, higher working
capital to support growth and a strategic decision to increase
inventory levels. At April 2, 2022,
Resideo had cash and cash equivalents of $244 million and total outstanding debt of
$1.4 billion.
Outlook
Based on first quarter results and the outlook for the remainder
of 2022, the company now expects full year 2022 revenue to be in
the range of $6.45 billion to
$6.65 billion, gross profit margin in
the range of 27.5% to 28.5% and operating profit in the range of
$680 million to $720 million.
The company expects second quarter 2022 revenue to be in the
range of $1.65 billion to
$1.70 billion, gross profit margin in
the range of 27.0% to 28.0% and operating profit in the range of
$165 million to $175 million.
Conference Call and Webcast Details
Resideo will hold a conference call with investors on
May 3, 2022, at 5:00 p.m. ET. An audio webcast of the call will
be accessible at https://investor.resideo.com, where related
materials will be posted before the call. A replay of the webcast
will be available following the presentation. To join the
conference call, please dial 888-660-6357 (U.S. toll-free) or
1-929-201-6127 (international), with the conference title "Resideo
First Quarter 2022 Earnings" or the conference ID: 7301399.
About Resideo
Resideo is a leading global manufacturer and distributor of
technology-driven products and solutions that provide comfort,
security, energy efficiency and control to customers worldwide.
Building on a 130-year heritage, Resideo has a presence in more
than 150 million homes globally, with 15 million systems installed
in homes each year. We continue to serve more than 110,000
professionals through leading distributors, including our ADI
Global Distribution business, which exports to more than 100
countries from nearly 200 stocking locations around the world. For
more information about Resideo, please visit www.resideo.com.
Contacts:
|
|
Investors:
|
Media:
|
Jason Willey
|
Oliver Clark
|
investorrelations@resideo.com
|
oliver.clark@resideo.com
|
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 2022 and full year
2022, (2) the duration and severity of the COVID-19 pandemic and
the disruption to our business and the global economy caused by it,
including its effect on our and our business partners' supply
chains, (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) the likelihood of continued
success of our transformation programs and initiatives, (5) risks
related to our recently completed acquisitions, including First
Alert, including our ability to achieve the targeted amount of
annual cost synergies, successfully integrate the acquired
operations (including successfully driving category growth in
connected offerings), and the expected net present value of tax
benefits resulting from the First Alert transaction and (6) 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, 2021 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 press release and we caution
investors not to place undue reliance on any such forward looking
statements.
Table 1: SUMMARY OF
FINANCIAL RESULTS (UNAUDITED) (1)
|
|
|
Q1 2022
|
|
|
Products &
Solutions
|
|
|
ADI Global
Distribution
|
|
|
Corporate
|
|
|
Total Company
|
|
Revenue
(2)
|
$
|
619
|
|
|
$
|
887
|
|
|
$
|
-
|
|
|
$
|
1,506
|
|
Cost of goods
sold
|
|
355
|
|
|
|
716
|
|
|
|
1
|
|
|
|
1,072
|
|
Gross profit
(loss)
|
|
265
|
|
|
|
170
|
|
|
|
(1)
|
|
|
|
434
|
|
Research and
development expenses
(3)
|
|
24
|
|
|
|
-
|
|
|
|
-
|
|
|
|
24
|
|
Selling, general and
administrative
expenses (3)
|
|
87
|
|
|
|
91
|
|
|
|
60
|
|
|
|
238
|
|
Operating profit
(loss)
|
$
|
153
|
|
|
$
|
80
|
|
|
$
|
(61)
|
|
|
$
|
172
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q1 2021
|
|
|
Products &
Solutions
|
|
|
ADI Global
Distribution
|
|
|
Corporate
|
|
|
Total Company
|
|
Revenue (2)
|
$
|
606
|
|
|
$
|
813
|
|
|
$
|
-
|
|
|
$
|
1,419
|
|
Cost of goods
sold
|
|
376
|
|
|
|
673
|
|
|
|
2
|
|
|
|
1,051
|
|
Gross profit
(loss)
|
|
230
|
|
|
|
140
|
|
|
|
(2)
|
|
|
|
368
|
|
Research and
development expenses
(3)
|
|
21
|
|
|
|
-
|
|
|
|
-
|
|
|
|
21
|
|
Selling, general and
administrative
expenses (3)
|
|
79
|
|
|
|
81
|
|
|
|
57
|
|
|
|
217
|
|
Operating profit
(loss)
|
$
|
130
|
|
|
$
|
59
|
|
|
$
|
(59)
|
|
|
$
|
130
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q1 2022 % change compared with Q1
2021
|
|
|
Products
&
Solutions
|
|
|
ADI Global
Distribution
|
|
|
Corporate
|
|
|
Total Company
|
|
Revenue (2)
|
|
2
|
%
|
|
|
9
|
%
|
|
N/A
|
|
|
|
6
|
%
|
Cost of goods
sold
|
|
(6)
|
%
|
|
|
6
|
%
|
|
|
(50)
|
%
|
|
|
2
|
%
|
Gross profit
(loss)
|
|
15
|
%
|
|
|
21
|
%
|
|
|
(50)
|
%
|
|
|
18
|
%
|
Research and
development expenses
(3)
|
|
14
|
%
|
|
N/A
|
|
|
N/A
|
|
|
|
14
|
%
|
Selling, general and
administrative
expenses (3)
|
|
10
|
%
|
|
|
12
|
%
|
|
|
5
|
%
|
|
|
10
|
%
|
Operating profit
(loss)
|
|
18
|
%
|
|
|
36
|
%
|
|
|
3
|
%
|
|
|
32
|
%
|
|
(1) Dollars are
reported in millions. The sum of the rounded components, and
related calculations, may
not equal the totals due to rounding.
|
|
(2) Represents Product
& Solutions revenue, excluding intersegment revenue of $95
million for the three
months ended April 2, 2022 and $94 million for the three months
ended April 3, 2021. ADI Global
Distribution does not have any intersegment revenue.
|
|
(3) Prior year
information was reclassified to present Research and development
expenses as a separate
line item. Research and development expenses were formerly
included within Selling, general and
administrative expenses.
|
Table 2:
CONSOLIDATED INTERIM STATEMENTS OF OPERATIONS
(UNAUDITED)
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
April 2,
|
|
|
April 3,
|
|
|
|
|
2022
|
|
|
2021
|
|
|
|
|
(In millions except shares in
thousands and per share data)
|
|
|
Net revenue
|
|
$
|
1,506
|
|
|
$
|
1,419
|
|
|
Cost of goods
sold
|
|
|
1,072
|
|
|
|
1,051
|
|
|
Gross profit
|
|
|
434
|
|
|
|
368
|
|
|
Research and
development expenses (1)
|
|
|
24
|
|
|
|
21
|
|
|
Selling, general and
administrative expenses (1)
|
|
|
238
|
|
|
|
217
|
|
|
Operating
profit
|
|
|
172
|
|
|
|
130
|
|
|
Other expense,
net
|
|
|
40
|
|
|
|
44
|
|
|
Interest
expense
|
|
|
11
|
|
|
|
13
|
|
|
Income before
taxes
|
|
|
121
|
|
|
|
73
|
|
|
Tax expense
|
|
|
34
|
|
|
|
24
|
|
|
Net income
|
|
$
|
87
|
|
|
$
|
49
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Number of Common Shares
Outstanding (in thousands)
|
|
|
|
|
|
|
|
Basic
|
|
|
145,118
|
|
|
|
143,382
|
|
|
Diluted
|
|
|
148,760
|
|
|
|
147,656
|
|
|
Earnings Per Share
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.60
|
|
|
$
|
0.34
|
|
|
Diluted
|
|
$
|
0.58
|
|
|
$
|
0.33
|
|
|
|
1) The
prior year unaudited Consolidated Interim Statements of Operations
were reclassified to present
Research and development expenses as a separate line item within
the statements. Research and
development expenses were formerly included within Selling, general
and administrative expenses.
|
Table 3: CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
|
|
|
|
|
|
April 2,
|
|
|
December 31,
|
|
|
|
2022
|
|
|
2021
|
|
|
|
(In millions, except shares in
thousands and par value)
|
|
ASSETS
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
244
|
|
|
$
|
779
|
|
Accounts receivable –
net
|
|
|
1,008
|
|
|
|
876
|
|
Inventories –
net
|
|
|
922
|
|
|
|
740
|
|
Other current
assets
|
|
|
165
|
|
|
|
146
|
|
Total current
assets
|
|
|
2,339
|
|
|
|
2,541
|
|
Property, plant and
equipment – net
|
|
|
350
|
|
|
|
287
|
|
Goodwill
|
|
|
3,125
|
|
|
|
2,661
|
|
Other assets
|
|
|
431
|
|
|
|
364
|
|
Total assets
|
|
$
|
6,245
|
|
|
$
|
5,853
|
|
LIABILITIES
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
958
|
|
|
$
|
883
|
|
Current maturities of
debt
|
|
|
12
|
|
|
|
10
|
|
Accrued
liabilities
|
|
|
576
|
|
|
|
601
|
|
Total current
liabilities
|
|
|
1,546
|
|
|
|
1,494
|
|
Long-term
debt
|
|
|
1,412
|
|
|
|
1,220
|
|
Obligations payable
under Indemnification Agreements
|
|
|
592
|
|
|
|
585
|
|
Other
liabilities
|
|
|
334
|
|
|
|
302
|
|
EQUITY
|
|
|
|
|
|
|
Common stock, $0.001
par value, 700,000 shares authorized,
147,068 and 145,372 shares issued and outstanding as of April
2,
2022, 146,248 and 144,808 shares issued and outstanding as of
December 31, 2021, respectively
|
|
|
-
|
|
|
|
-
|
|
Additional paid-in
capital
|
|
|
2,135
|
|
|
|
2,121
|
|
Treasury stock, at
cost
|
|
|
(27)
|
|
|
|
(21)
|
|
Retained
earnings
|
|
|
404
|
|
|
|
317
|
|
Accumulated other
comprehensive loss
|
|
|
(151)
|
|
|
|
(165)
|
|
Total equity
|
|
|
2,361
|
|
|
|
2,252
|
|
Total liabilities and
equity
|
|
$
|
6,245
|
|
|
$
|
5,853
|
|
Table 4:
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
|
|
|
Three Months Ended
|
|
|
|
April 2,
|
|
|
April 3,
|
|
|
|
2022
|
|
|
2021
|
|
|
|
(In millions)
|
|
|
Cash flows (used for) provided by operating
activities:
|
|
|
|
|
|
|
Net income
|
$
|
87
|
|
|
$
|
49
|
|
|
Adjustments to
reconcile net income to net cash (used for)
provided by operating activities:
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
20
|
|
|
|
23
|
|
|
Stock compensation
expense
|
|
11
|
|
|
|
9
|
|
|
Other
|
|
2
|
|
|
|
25
|
|
|
Changes in assets and
liabilities, net of acquired companies:
|
|
|
|
|
|
|
Accounts
receivable
|
|
(61)
|
|
|
|
(17)
|
|
|
Inventories –
net
|
|
(66)
|
|
|
|
(10)
|
|
|
Other current
assets
|
|
(12)
|
|
|
|
16
|
|
|
Accounts
payable
|
|
17
|
|
|
|
(15)
|
|
|
Accrued
liabilities
|
|
(66)
|
|
|
|
(66)
|
|
|
Obligations payable
under Indemnification Agreements
|
|
7
|
|
|
|
(7)
|
|
|
Other
|
|
2
|
|
|
|
(2)
|
|
|
Net cash (used for)
provided by operating activities
|
|
(59)
|
|
|
|
5
|
|
|
Cash flows used for investing
activities:
|
|
|
|
|
|
|
Expenditures for
property, plant, equipment and other intangibles
|
|
(19)
|
|
|
|
(19)
|
|
|
Cash paid for
acquisitions, net of cash acquired
|
|
(633)
|
|
|
|
(5)
|
|
|
Other
|
|
(13)
|
|
|
|
-
|
|
|
Net cash used for
investing activities
|
|
(665)
|
|
|
|
(24)
|
|
|
Cash flows provided by financing
activities:
|
|
|
|
|
|
|
Proceeds from long-term
debt
|
|
200
|
|
|
|
950
|
|
|
Payment of debt
facility issuance and modification costs
|
|
(4)
|
|
|
|
(21)
|
|
|
Repayment of long-term
debt
|
|
(3)
|
|
|
|
(921)
|
|
|
Other
|
|
(4)
|
|
|
|
5
|
|
|
Net cash provided by
financing activities
|
|
189
|
|
|
|
13
|
|
|
Effect of foreign
exchange rate changes on cash and cash
equivalents
|
|
-
|
|
|
|
(3)
|
|
|
Net decrease in cash
and cash equivalents
|
|
(535)
|
|
|
|
(9)
|
|
|
Cash and cash
equivalents at beginning of period
|
|
779
|
|
|
|
517
|
|
|
Cash and cash
equivalents at end of period
|
$
|
244
|
|
|
$
|
508
|
|
|
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SOURCE Resideo Technologies, Inc.