Resideo uses 2023 momentum to pivot in 2024

SCOTTSDALE, Ariz. – Resideo Technologies exited 2023 with a strong Q4, and now it's riding that momentum into 2024, making some significant changes to reshape its portfolio and operations.

Among the highlights for the year, Resideo saw revenue of $6.2 billion for 2023, an adjusted EBITDA of $552 million, and $440 million in cash from operations. Its report noted that the company improved business execution in the second half of the year with products and solutions transformation work beginning to show through in its financials.

“We built momentum throughout the year in order activity within products and solutions. We also made significant progress on our key strategic operational initiatives and in meaningful reducing structural costs.” President and CEO Jay Geldmacher said during the call.

Resideo also underwent some considerable changes during 2023 with the divestiture of Genesis and the outsourcing of its San Diego casting facility. Geldmacher reported that the company is working on rebalancing its product portfolio and ADI footprint to better position the business for profitable long-term growth.

It’s not all roses for Resideo, however. The Genesis Cable divestiture negatively impacted sales by $105 million and operating income by up to $10 million. Additionally, the company was subject to the same challenges as every company currently operating in the residential security sector, reporting that the residential repair and remodel market is expected to be flat to down LSDs year-over-year in 2024.

More importantly changes are coming for one of Resideo’s large contracts. “At the end of December, we executed an amendment to our contract to directly supply ADT hardware for their North American residential security offerings,” said CFO Tony Trunzo. “Our agreement now runs through early 2025, at which time deliveries of these products will conclude.”

He continued, “Based on this agreement, we expect our 2024 security hardware sales to ADT to decline by approximately $100 million compared with 2023 levels with a similar additional reduction in 2025.”

“Looking back on 2023, both businesses navigated significant market headwinds with an almost 20% reduction in existing home sales in the U.S., leading to the weakest housing turnover year since 1995. This had negative implications for our residential security business within both products and solutions and ADI,” Geldmacher said in his closing remarks.

He also soothed potential losses on the ADT partnership by teasing future collaboration. “Since I arrived at residential almost four years ago, our team has built a collaborative, constructive relationship with ADT from the executive level down. While we are wrapping up this legacy contract, we believe these relationships have created a strong shared foundation for continued collaboration and partnership.”

Geldmacher finished by saying, “Our focus remains firmly on executing our key strategic initiatives while driving profitability expansion and strong cash flow. We want to again thank the entire Resideo employee base for their outstanding efforts during 2023 and I'm excited to continue to build on the momentum together in 2024.”

The full webcast of the presentation can be found online at investor.resideo.com.