Resideo Stock Fall, Weak ADI Results Q2 2023
Resideo's stock fell 13% after releasing its Q2 2023 results, signaling its continued decrease after multiple rounds of guidance miss and cost-cutting since last year.
Inside this note, we examine Resideo and ADI's financials, Resideo's Q2 2023 earnings call, comments from Resideo's executives, and Resideo's position compared to other security distributors.
Resideo ** ***** ***********
******* ******** ******* ** $*.* ******* in ** ****, * *% *** drop. *** ********* ****** *** *** quarter *** $*** ******* ******** ** $186 ******* ** ****, ** *% decline.
Stock ****
*******'* ***** ******* ~**% ***** *** market ******:
More **** *******
** ******** ** *** **** ***********, Resideo ** ********** **** **** ****, the *******'* *** *** ********** **** in *** ** ******** ****:
** *** ********** ** ****** *** cost ********* *** **** ******* ******* identified *** *** ****** **** ** 2023 **** ******** **** *** ** 2022 ******* *** ******** ** ******** at ***** $*** ******* ** ********** savings.
******* *** ********* ******* ****** ** cost **** ***** **** ****, *** context, *********** **** *****, **** ******* **** Analyzed
Lowered ********
******* ******* *** **** ******* ********* it *** ** *** *** ** last **** *** ********** ****** ** 2023. *** ******* ******* ******** ******** (from $*,*** - $*,*** ** $*,*** - $*,***) *** *** ***** ******* outlook *** ******* ** ***** ****** (26.8% - **.*% ** **.*% - 27.2%).
*** *******'* *** *** ********** ********* "soft" ****** *** *** ** **** not ****** ******* ********* ** ** down ** **:
**** *** ****** ****** *** ****** channel ********* ****** *** * ****** of *** ******* ******** ****** ******* results. *** ** ****** ***** ********* to ******** ** *** ****** **** of ****.
*** * ***** **** *** **** their[channel's] ******* ******* ** **** * said **** ******* ** *** *** inventory, *** *********** ** **** ******* inventory **** *** ** **** ************ in **.
*** *** ******** **** **** **** not ********* **** **** ***** ******* increase ******:
****, * ***** *** **** **** is, ** **** **** ******* **** by *** ***** ***** ** ******** but ****'* **** *** ****.
** ***** ** ********** ******* *******, it **** ** ****** *******. [**] have **** ******* *** **** *** market ******** ** *** ************ ******** that ***** * *** ** ***** increases **** ******. ** *** ******* doesn't *********** ********** ********** ***** ****** at **** *****.
ADI *********** ****
*** *** * **** *******, ********* flat ******* ** ******** ** *** historical **** ** *%+ ******, *** its ******* ******* *.* ********** ******. The *******'* *** **** ****** **** into **** ******* ***** ***'* **********:
*** ** ******* *** $*** *******,essentially **** to the prior year. ADI revenue has grown at a 7% compound rate over the past four years. Growth in North America of 2% is offset by declines in EMEA as well as the sale of our India operations in late 2022. We saw strength ** *** ****** ******* ******** and continued softness in residential intrusion and AV categories.
*** ***** ****** ** *** ****** quarter *** **.*% ******** **** **% last **** **** ** *** *** peak ****** ** ********** *** ************ pricing ********. [******** *****]
*******, ****** ******* *** ****** ** Q2 *** ***. **** ** ****** this *** **** ****** *********** *** cloud ******* **.
Retrenching ** ***
*******'* *** **** ****** ********* **** there *** ******* **** ********* ********* at ***, ********* ********* ****:
****** *** ****** *******, *** ********* restructuring **********, ********* ******** ********* ********** and ******* ********** ********.
Executives ***** **** ***'* ********* *****
** **** ******, ****** ********* ***'* inventory ***** ** *** ** **** earnings ****:
*** **** ********* ** *** *** 60s **** *****. ** *** ***** up ** ** ** **** ****. It *** **** **** **** ****** close ** ***** ** ********** ******** to ** ** *** *** *** and ****’* * ******* *** * distributor ******* *** **** ********* **** want ** *****, *** *** *********** they **** ** **** ** ***** of ** **** ********.
**’** ***** * **** *** ** time ******* ***** ***** ** **** inventory ****** ** ** *.*. *** service ****** *** ********** **** *** customers. **** ***** ***** **’** ******* close ** ***** ** ****** **** where **’** ***** ** ***.
********* (*.*. ****** ***** ** *******/*********** can *** ******** ***********) ** * major ********* ** *** ****** ******* competitors.
1H ***********
*** *** ***** **** ** ****, Resideo *********** $*.* ******* ** *******, a *% ******* ***. ***'* ** 2023 ******* *** $*.* *******, ****** unchanged **** **** ****.
Past ***** ***********
**********, ******* ******** ****-****, *** *** sales ****** ** ~*% ** **** and **% ** ****. *** ***** margin *** ******** **** **.*% ** 2020 ** **.*% ** ****.
**** *** **** *** *****, *** product **** ** ******* *** **** the **** ******* *** ***'* ******* raise ********* **** *** ****** *** will ** ** *** ********* ******.
ADI *** *********
*** ******** ********* **** **** **** its******** ***** *** *********, ***** *** ******* *************** ******* *********** ***** *******.
** ***'* **** ($*+ ******* ****** revenue), ********* ***** *** *** * major ******, ****** **** *** ********** to ****, ******* * *****-**** ******* advantage **** ***** *** ** ***** partially ******** ***** **********.
***** ************ ********* ** *** ** 2023*******, ****** ** *** *** ********** sales ******* **** ***** ******** ***** were ***** *****.
Stock ********** *******
******* ***** ** *** ******* ** nearly **** *** ***** ** *** when ** *** **** *** ** Honeywell, ** *** ***** ***** *****:
******'* ***** **** ** #*. *** reap **** *** ***.
**** ** * **** *****. *** built * ********** ** ********* ******* Security, ****, ***** *** ************* ********.
**** **** ***** ***’*** ******** **** the ****, **** ***** ********* **** their *** *********** ************* *** ******* their *** ******** **** ******.
*** ********** ******* ************ ***** *********** with ***** *** ********* *** *******, and ** ** **** **** ******* down *** *******, **** ***** ****** were ******** **** *** ** **, UK, *** *** ****.
********* ***** *** ***, ** ***** marketing *** ********** ***** ** ****** the **** ********* **** ** **** the ******** **** **** ** *** a ******** **** **.
** ** ********* ** ******* ******* Security, **** ******, ********, *** ***** protection, *** **** ** ***** ******** are ****** *** ** ********* ***** to ***** **** **********.
** ** **** ****** ******* ******** without ****** ** **** *** *** vendors, *** ***** ********* ***** ****** choices *** **** ***’* *********’ ****** to ****** * ***, **** **** find ***** ******* *** ******* *** taking ********* ** *** ***********.
************* ***’* ***** **** **** *********, their **** **** *************, *** ***** trusting ***** ******* **** ****** ** a ******. ********** *** ********* ******* have **** *** **** ******* *********** distributor.
**** **** ** *** ****** *** Resideo ******* ** *** ***** ********* conflict ** ******** ***** ***** ******** investments *********. ********* ** ** *** a **** **** ** ** ******** with * ****** **** ******** **** you ** **** *** ****** ********.
******** ******* *** ***** *** ****** to **** ******, *** **** ** does, ****** **** ***** **** **** effort.
** **** **** *** **** ** only **** **** ******* **** *** loyal ** *** ******** **** *****, vet ***** ********, *** ***’* **** direct ** ******* **** ***** *** customers.
************ *** ** * ******, *** you **** ** **** *** **** Enterprise ******.