Resideo Q1 results up 3% year-over-year, softness in residential market

SCOTTSDALE, Ariz. – Commercial and residential distributor of security and audio-visual products Resideo presented a positive first quarter earnings call with modest gains.

Quarter highlights include a net revenue of $1.62 billion, up 8 percent from $1.5 billion in the third quarter 2021. Other financial indicators were also positive although the failed to reach the same heights as previous quarters with a gross profit margin of 26.6 percent, compared to 28.1 percent in the prior year comparable period, and an operating profit of $155 million versus $167 million in Q3 2021.

"Financial results were mixed in the third quarter as continued growth at ADI was offset by headwinds to Products & Solutions' revenue and profitability," Jay Geldmacher, Resideo president and CEO, said in an official release. "As the third quarter progressed, we saw softer-than-expected orders and sales across Products & Solutions, with customers looking to normalize inventory levels as macro uncertainty grows. Performance remained strong within Air products, particularly in connected thermostats, and we are well positioned across the portfolio as energy management and energy efficiency become even more critical to end users. We continue to navigate the changing macro environment and we are taking actions to ensure we protect profitability while staying focused on our strategic priorities."

Resideo’s shortfalls largely mimic the experience of other companies in the security industry during the first quarter with many lamenting poor performances in residential sales but seeing positive results from commercial instead with an eye towards macroeconomic trends as the culprit of current events, although with signs that things may be improving thanks to stabilization in the supply chain.

“While we are still carrying higher-than-usual delinquent backlog, levels have shrunk meaningfully from a year ago,” Geldmacher said during the earnings call this month. “With the supply chain beginning to normalize, resources can be shifted from short-term tactical initiatives that have consumed disproportionate engineering time over the past 18 months. This allows our operations and engineering teams to return more of their focus to structural value creation initiatives around new products and value engineering.”

New products for the company include the HPC-r indoor control unit for heat pumps. In addition, Resideo launched the VX1 video doorbell - part of the First Alert brand - at ISC West this year that was available starting in May, and made use of AI-based intelligent event detections with video verification.

You can find the full results of the financial call online at investor.resideo.com.