Latest news with #REZI
Yahoo
20-05-2025
- Business
- Yahoo
REZI Q1 Earnings Call: Pricing Actions and Tariff Mitigation Drive Outperformance
Home automation and security solutions provider Resideo Technologies (NYSE:REZI) reported revenue ahead of Wall Street's expectations in Q1 CY2025, with sales up 19.1% year on year to $1.77 billion. The company expects next quarter's revenue to be around $1.83 billion, close to analysts' estimates. Its non-GAAP profit of $0.63 per share was significantly above analysts' consensus estimates. Is now the time to buy REZI? Find out in our full research report (it's free). Revenue: $1.77 billion vs analyst estimates of $1.72 billion (19.1% year-on-year growth, 3% beat) Adjusted EPS: $0.63 vs analyst estimates of $0.31 (significant beat) Adjusted EBITDA: $168 million vs analyst estimates of $168.5 million (9.5% margin, in line) The company reconfirmed its revenue guidance for the full year of $7.39 billion at the midpoint Adjusted EPS guidance for the full year is $2.35 at the midpoint, beating analyst estimates by 6% EBITDA guidance for the full year is $765 million at the midpoint, above analyst estimates of $730.3 million Operating Margin: 7.7%, in line with the same quarter last year Free Cash Flow was -$96 million compared to -$19 million in the same quarter last year Market Capitalization: $3.14 billion Resideo's first quarter results were shaped by a combination of higher sales volumes, successful new product launches, and disciplined price actions. Management pointed to strong demand for new offerings in both its Products and Solutions and ADI Distribution segments, highlighting the impact of the Snap One acquisition alongside robust organic growth. CEO Jay Geldmacher noted, "We achieved 6% organic revenue growth year-over-year at our Products and Solutions business segment," attributing results to both volume and pricing gains. Looking forward, Resideo management reaffirmed its full-year outlook, emphasizing a proactive approach to tariffs and ongoing price adjustments. CFO Michael Carlet explained that phased price increases are planned to help offset tariff costs throughout the year, with additional mitigation steps aimed at protecting margins. Management maintained a cautious stance on the macroeconomic environment, but expressed confidence that ongoing execution and cost control will help the company achieve its revenue and profit targets for 2025. Resideo's management cited several specific operational and strategic factors that contributed to first-quarter performance, as well as actions being taken in response to a dynamic external environment. The following insights summarize the main themes management discussed: Tariff Mitigation Strategy: Resideo is navigating evolving U.S. tariff policy through a combination of phased price increases, supplier negotiations, and a diversified manufacturing footprint. Management reported that about 98% of Products and Solutions goods sourced from Mexico are USMCA compliant and currently exempt from tariffs, reducing exposure for its largest U.S. business lines. New Product Momentum: Demand was strong for new product launches, including the Honeywell Home FocusPRO thermostats and First Alert VISTA H series security products. Management emphasized an "accelerating cadence of new product introductions" and highlighted the partnership with Google Nest for smart smoke and carbon monoxide alarms and the upcoming First Alert CX4 Camera Series. Snap One Integration Progress: The ADI segment saw significant contributions from the Snap One acquisition, including the launch of nearly 100 new products in the quarter. Integration is ahead of year two synergy goals, and cross-selling initiatives are driving revenue growth, especially in exclusive brands and commercial categories. Strength in Commercial Channels: ADI's commercial product categories, such as security and professional audio/video, showed notable growth, offsetting softness in the U.S. residential audio/video market. E-commerce also set new records for daily sales and contributed positively to margins. Margin Expansion Drivers: Gross margin improvements were attributed to operational efficiencies, favorable product mix, and the growing share of exclusive and higher-margin products. Management noted this was the eighth consecutive quarter of year-over-year gross margin expansion in Products and Solutions, reflecting structural improvements and supply chain optimization. Management's outlook for the next quarter and full year centers on pricing strategies, tariff mitigation, and continued new product introductions as key themes influencing guidance. The company is focused on maintaining margin stability while navigating uncertain market conditions. Tariff and Pricing Dynamics: Planned phased price increases are expected to offset tariff-related cost pressures, with management monitoring potential impacts on customer demand and competitive positioning. Product Launch Cadence: Management is prioritizing the rollout of new products across air, comfort, security, and water categories, viewing innovation as essential to sustaining revenue and margin growth. Macro and Housing Market Trends: While the company sees ongoing challenges in the U.S. housing market, management believes improving new home sales and stable remodeling activity could provide incremental tailwinds if macro conditions improve. Ian Zaffino (Oppenheimer): Asked about the impact of phased price increases on both demand and margin, especially in the context of tariff mitigation. Management replied that ADI expects to fully offset tariff costs, and Products and Solutions anticipates limited demand sensitivity due to proactive customer communication and the small share of products affected. Erik Woodring (Morgan Stanley): Inquired about customer buying behavior and whether there was evidence of customers pulling forward purchases ahead of price increases. Executives reported minimal buy-ahead activity, with demand remaining steady in both March and April. Erik Woodring (Morgan Stanley): Also questioned where Resideo sees itself in the broader residential and commercial spending cycle. Management described the residential environment as somewhat depressed due to low existing home sales but pointed to improvement in new home sales and resilience in remodeling. Amit Daryanani (Evercore ISI): Asked whether gross margins could exceed 30% if end markets improve. CFO Michael Carlet said ongoing structural improvements and new product launches should support continued gross margin expansion, though no specific targets were provided. No other analyst questions: There were no further analyst questions on the call beyond those summarized above. In coming quarters, the StockStory team will track (1) execution of phased price increases and the effectiveness of tariff mitigation, (2) the impact of new product launches—particularly in connected devices and smart home safety—on channel demand and margin mix, and (3) progress on integration synergies and cross-selling resulting from the Snap One acquisition. Additional attention will be paid to signs of recovery in the U.S. housing market, as well as any shifts in customer demand tied to price adjustments. Resideo currently trades at a forward EV-to-EBITDA ratio of 5.2×. Should you double down or take your chips? Find out in our free research report. Market indices reached historic highs following Donald Trump's presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth. While this has caused many investors to adopt a "fearful" wait-and-see approach, we're leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 176% over the last five years. Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
13-05-2025
- Business
- Yahoo
3 Stocks Under $50 in Hot Water
The $10-50 price range often includes mid-sized businesses with proven track records and plenty of growth runway ahead. They also usually carry less risk than penny stocks, though they're not immune to volatility as many lack the scale advantages of their larger peers. Luckily for you, our mission at StockStory is to help you make money and avoid losses by sorting the winners from the losers. Keeping that in mind, here are three stocks under $50 to avoid and some other investments you should consider instead. Share Price: $33.50 Born out of a 2018 merger between Keurig Green Mountain and Dr Pepper Snapple, Keurig Dr Pepper (NASDAQ:KDP) is a consumer staples powerhouse boasting a portfolio of beverages including sodas, coffees, and juices. Why Are We Hesitant About KDP? Sizable revenue base leads to growth challenges as its 6.5% annual revenue increases over the last three years fell short of other consumer staples companies Day-to-day expenses have swelled relative to revenue over the last year as its operating margin fell by 5.7 percentage points Underwhelming 5.7% return on capital reflects management's difficulties in finding profitable growth opportunities At $33.50 per share, Keurig Dr Pepper trades at 16.2x forward P/E. Dive into our free research report to see why there are better opportunities than KDP. Share Price: $21.13 Resideo Technologies, Inc. (NYSE: REZI) is a manufacturer and distributor of technology-driven products and solutions for home comfort, energy management, water management, and safety and security. Why Are We Cautious About REZI? Annual revenue growth of 4.8% over the last two years was below our standards for the industrials sector Performance over the past two years shows its incremental sales were less profitable, as its 3.1% annual earnings per share growth trailed its revenue gains Shrinking returns on capital suggest that increasing competition is eating into the company's profitability Resideo's stock price of $21.13 implies a valuation ratio of 5.2x forward EV-to-EBITDA. Check out our free in-depth research report to learn more about why REZI doesn't pass our bar. Share Price: $36.63 A spin-off of a spin-off, Vontier (NYSE:VNT) provides electronic products and systems to the transportation, automotive, and manufacturing sectors. Why Is VNT Risky? Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion Free cash flow margin dropped by 14.8 percentage points over the last five years, implying the company became more capital intensive as competition picked up Diminishing returns on capital suggest its earlier profit pools are drying up Vontier is trading at $36.63 per share, or 11.6x forward P/E. To fully understand why you should be careful with VNT, check out our full research report (it's free). The market surged in 2024 and reached record highs after Donald Trump's presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025. While the crowd speculates what might happen next, we're homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver's seat and build a durable portfolio by checking out our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 176% over the last five years. Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today for free.
Yahoo
22-04-2025
- Business
- Yahoo
1 Cash-Producing Stock for Long-Term Investors and 2 to Be Wary Of
While strong cash flow is a key indicator of stability, it doesn't always translate to superior returns. Some cash-heavy businesses struggle with inefficient spending, slowing demand, or weak competitive positioning. Cash flow is valuable, but it's not everything - StockStory helps you identify the companies that truly put it to work. Keeping that in mind, here is one cash-producing company that leverages its financial strength to beat its competitors and two that may struggle to keep up. Trailing 12-Month Free Cash Flow Margin: 4.2% With a higher focus on style and aesthetics compared to other large general merchandise retailers, Target (NYSE:TGT) serves the suburban consumer who is looking for a wide range of products under one roof. Why Are We Wary of TGT? Disappointing same-store sales over the past two years show customers aren't responding well to its product selection and store experience Commoditized inventory, bad unit economics, and high competition are reflected in its low gross margin of 28% Subpar operating margin of 5.3% constrains its ability to invest in process improvements or effectively respond to new competitive threats At $94.88 per share, Target trades at 10.1x forward price-to-earnings. To fully understand why you should be careful with TGT, check out our full research report (it's free). Trailing 12-Month Free Cash Flow Margin: 5.4% Resideo Technologies, Inc. (NYSE: REZI) is a manufacturer and distributor of technology-driven products and solutions for home comfort, energy management, water management, and safety and security. Why Does REZI Fall Short? Sales trends were unexciting over the last two years as its 3% annual growth was below the typical industrials company Falling earnings per share over the last two years has some investors worried as stock prices ultimately follow EPS over the long term Eroding returns on capital suggest its historical profit centers are aging Resideo's stock price of $15.46 implies a valuation ratio of 6.5x forward price-to-earnings. Dive into our free research report to see why there are better opportunities than REZI. Trailing 12-Month Free Cash Flow Margin: 31.3% Having been at the forefront of developing the standards for cellular connectivity for over four decades, Qualcomm (NASDAQ:QCOM) is a leading innovator and a fabless manufacturer of wireless technology chips used in smartphones, autos and internet of things appliances. Why Are We Fans of QCOM? Healthy operating margin of 24.6% shows it's a well-run company with efficient processes Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends, and its recently improved profitability means it has even more resources to invest or distribute Industry-leading 52.5% return on capital demonstrates management's skill in finding high-return investments Qualcomm is trading at $137.89 per share, or 11.8x forward price-to-earnings. Is now a good time to buy? Find out in our full research report, it's free. Market indices reached historic highs following Donald Trump's presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth. While this has caused many investors to adopt a "fearful" wait-and-see approach, we're leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years. Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Sterling Infrastructure (+1,096% five-year return). Find your next big winner with StockStory today for free. Sign in to access your portfolio
Yahoo
21-02-2025
- Business
- Yahoo
Resideo Technologies Inc (REZI) Q4 2024 Earnings Call Highlights: Record Cash Flow and ...
Release Date: February 20, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Resideo Technologies Inc (NYSE:REZI) reported total net revenue of approximately $6.8 billion, an 8% year-over-year growth. The company achieved a record free cash flow generation of $444 million, exceeding their outlook of at least $375 million. Products and solutions segment experienced growth in organic revenue and gross margins, with a 240 basis points expansion year over year. ADI achieved 2% organic net revenue growth year over year, with strong performance in digital channels and product categories like video surveillance and residential security. The integration of Snap One into ADI is progressing well, achieving approximately $17 million of run rate synergies, 40% higher than expected. The global macroeconomic environment remains mixed, with uncertainties such as US dollar strength and potential tariff changes. Fourth quarter organic net revenue for products and solutions declined by approximately 1% year over year, excluding currency impacts. The security channel continues to experience soft market conditions, impacting overall performance. Despite strong performance in some areas, the existing US home resale market remains soft, and inflation persists globally. The company anticipates a lower free cash flow conversion ratio in 2025 due to higher capital expenditures for strategic store expansions and ERP system implementation. Warning! GuruFocus has detected 2 Warning Sign with REZI. Q: Can you elaborate on the new product innovations and the product roadmap for 2025? A: Unidentified_4: We are revitalizing our existing product lines to enhance customer value. Two products have already been launched and received positively. We plan to continue this trend with new offerings in thermostats, security, and safety products. After revitalizing current categories, we will expand into new product categories and markets. Q: Could you discuss your contingency plans regarding tariffs and your supply chain footprint? A: Unidentified_3: We have proactively engaged with our customers to discuss potential impacts and strategies, including pricing adjustments and operational changes. Our comprehensive playbook includes commercial actions and supply chain moves to mitigate tariff impacts. Q: How did the 34% growth in exclusive brand revenue contribute to ADI's gross margin improvement? A: Unidentified_5: The 34% growth was from ADI's legacy exclusive brands, not including Snap. The integration of Snap's exclusive brands with ADI's larger customer base is expected to drive higher margins and remains a focus area. Q: What is driving the faster-than-expected synergies from the Snap One acquisition? A: Unidentified_5: The $17 million in synergies achieved in 6.5 months post-acquisition is primarily from cost savings. The integration approach, combining leadership from both Snap and ADI, has accelerated synergy identification and execution. Q: How do you expect strong demand areas in ADI to translate to pricing power, and is the market still competitive? A: Unidentified_5: The market became more competitive, especially in Q4. However, e-commerce and exclusive brands, which are margin accretive, are expected to drive higher margins. Investments in ERP will enhance pricing capabilities, benefiting future performance. Q: What are the growth assumptions for ADI, particularly in video and fire categories? A: Unidentified_5: We remain cautiously optimistic about growth in 2025, supported by a strong opportunity pipeline, healthy backlog, and robust project bids, especially in commercial categories. Snap's Control 4 dealers are expected to contribute positively. Q: What are the growth drivers and margin expectations for Snap One? A: Unidentified_5: Snap is excellent at launching new products, with over 400 launched last year. We expect enhancements in Control 4 products and opportunities to expand Snap's product line to ADI's larger customer base, driving margin expansion. Q: Are your competitors facing similar tariff issues, and how does this affect your pricing strategy? A: Unidentified_3: Competitors have varied manufacturing locations, including Mexico and China. Our comprehensive review considers these factors. Despite competitive pricing pressures, our focus on e-commerce and exclusive brands should enhance pricing power. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus. Sign in to access your portfolio
