Resideo Technologies (REZI) Bank of America Securities 2024 Leveraged Finance Conference summary

Company overview and recent developments

• Operates two main businesses: ADI distribution (commercial security) and Products & Solutions (residential brands like Honeywell Home, First Alert).

• 2023 combined revenue was $6B, with $1.7B profit and nearly $600M adjusted EBITDA, before the Snap One acquisition.

• Snap One acquisition added over $1B in revenue and $100M in EBITDA, enhancing proprietary and exclusive brand offerings.

• Focused on selling to professionals, leveraging both equity and debt investment opportunities.

• Six consecutive quarters of year-over-year margin accretion, with ongoing but moderating margin expansion.

Business performance and growth drivers

• Margin profiles vary by product line; water products have the lowest margins due to OEM nature.

• Recent 4% organic growth in P&S was driven more by pricing than volume, with new home construction and remodel activity as key drivers.

• EMEA region faces regulatory challenges, especially in the boiler and heat pump markets.

• Security segment is undergoing product line refreshes and new product initiatives to regain share.

• Inventory levels have normalized after COVID-related disruptions.

Product innovation and refresh strategy

• Emphasis shifting from margin expansion to new product introductions (NPI) and product refreshes.

• Upcoming launches span entry-level to high-end thermostat/HVAC products over the next few years.

• Security and safety (First Alert) lines targeted for share recapture and brand leverage.